UNITED STATES, WASHINGTON (OBSERVATORY) — One of the senior officials from the Central Bank of China revealed new details of the digital currency being developed by the agency, noting that the principles of its functioning will be in many respects similar to Libra from Facebook, reports Reuters.
According to the deputy director of the payment department of the People’s Bank of China (PBoC), Mu Changchun, the cryptocurrency will be much like Facebook’s stable Libra. National cryptocurrency is being developed to protect “monetary sovereignty and legal currency status” in the country. According to the representative of the Chinese Central Bank, the “digital yuan” can be used on such large payment platforms as WeChat and Alipay.
In addition, the official pointed out that the digital currency issued by private corporations could cause large losses for users if the issuing organization suddenly goes bankrupt. The digital currency of the Chinese Central Bank has no such risks and is comparable in terms of reliability with paper money, and for interacting with cryptocurrency, you do not need constant access to the Internet.
The national digital currency of China will ensure the safety of users’ personal data, but will not allow the implementation of money laundering operations, assures Mu.
Earlier, information appeared on the network that a number of companies would participate in the distribution of cryptocurrency. Subsequently, representatives of media organizations and the Chinese central bank denied this information.
There is a possibility that the digital currency of the People’s Bank of China may appear earlier than the cryptocurrency project Facebook. Informants of the China Daily publication claim that the announcement of Libra could affect the plans of the People’s Bank of China and force it to consider new models for implementing the tool, in which non-governmental institutions will play a more important role.
Future trials should focus on non-governmental and cross-border scenarios. Many participants, including private and state-oriented companies, can join the central bank process.
Chairman of the Chinese payment system UnionPay and a former official of the People’s Bank of China, Shao Fujun, said that various formats and plans for launching digital currency are being considered. “It will have many positive consequences, including in the context of tracking cash flows in economic activity and supporting monetary policies,” he said.
At the same time, Fujun noted that the digital currency may face a number of difficulties associated with international cooperation and the establishment of the exchange rate.
A prototype of the digital currency issued by the central bank (CBDC) already exists, and the digital money research group has fully developed the blockchain architecture for it, Deputy Director of the Payment and Settlement Decisions Division of the People’s Bank of China Mu Changchun said earlier at an event held by the China Finance 40 Forum.
Changchun noted that the department has been conducting research and development since 2014. The official noted that China’s CBDC will not be based on the blockchain alone, as this could prevent its distribution in retail payments.
Mu Changchun reiterated the NBK’s intention to replace the outstanding cash in digital currency, but will not affect monetary policy and term deposits. The NBK seeks the official introduction of its own digital currency after five years of deliberation. China may be one of the first large economies to introduce cryptocurrencies.
Earlier, the People’s Bank of China forbade trading with bitcoins and other cryptocurrencies, as well as conducting ICOs. The country closed 88 cryptocurrency exchanges and stopped 85 ICOs.
Since the end of 2017, China has been recognized as one of the key markets for cryptocurrency in the world: at that time, about 80% of the world’s mining capacities were located on the territory of the country. Computing centers were based, as a rule, in remote provinces of China, this was due to the low cost of electricity.
However, keeping digital money in the country is not prohibited. In the report of the official Xinhua government news agency, cryptocurrency Bitcoin was called an asset that has the characteristics of an ideal “safe haven” for investors.
Geopolitical tensions in the world have led the Chinese authorities to change their attitude towards cryptocurrencies, Cryptopolitan writes. Chinese analysts said that since the beginning of 2019 there has been an escalation of fiscal and trade disputes, as well as general market volatility. Experts believe that this could lead to a slowdown in the global economy.
Aspiration Facebook Inc. The creation of the Libra cryptocurrency caused concern among global central banks, including the NBK, which stated that the digital asset should be placed under the control of the central bank in order to prevent potential currency risks and protect the credibility of monetary policy.
The central bank will follow the trends in the development of virtual currency abroad and at home, the NBK said in a statement of the work plan for the second half of 2019. Unlike decentralized proposals based on the blockchain, the NBK currency is designed to give Beijing more control over your financial system.
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