The People’s Bank of China accelerates the design of a system in response to Libra’s proposal. The crypto currency would also support the circulation of the yuan and its internationalization.
According to a senior official, the People’s Bank of China is about to issue its own crypto currency.
The bank’s researchers have been working hard since the year 2018 to develop its system. According to what Mu Changchung, deputy director of the payments department of the People’s Bank of China, commented during an event held by China Finance Forum 40, on the weekend in Yinchun, Heilongjian, the bank’s crypto currency is “about to be launched.” Mu Changchung did not give any specific details on when the launch could occur.
Mu repeated the People’s Bank of China’s intention of replacing M0, or cash in circulation, with the new cryptocurrency instead of M2, which would lead to expanded credits and an impact on monetary policy. The cryptocurrency will also support the circulation of the yuan and its internationalization, said the executive.
These data indicate that the People’s Bank of China is slowly moving toward the introduction of its own cryptocurrency, after five years of research. Facebook’s interest in creating the Libra cryptocurrency has caused concern among central banks throughout the world, including the People’s Bank of China. The financial institution said that cryptocurrencies or digital assets should be placed under banking supervision to avoid the potential risks of foreign exchange and to protect the authority of monetary policy.
Sun Tianqi, an official from China’s State Administration of Foreign Exchanges, said in the forum that “Libra should be seen as a foreign currency and placed under China’s Forex management framework.”
Unlike decentralized blockchain-based offers, the People’s Bank of China’s cryptocurrency is aimed at giving Beijing more control over its financial system.
According to patents registered by the Central Bank, customers and companies will download a mobile wallet and exchange their yuan for the new cryptocurrency, which they will be able to use for making and receiving payments. Crucially, the People’s Bank of China will also be able to keep track of each time money when passes from one person to another.
The People’s Bank of China said in a statement released in early August that the bank “will accelerate China’s digital tender research” and it will monitor the trends in the development of cryptocurrencies, both in the territory and abroad, presenting its work plan for the second half of 2019.
Dave Chapman, executive director of BC Technology Group Ltd, explained that “with the announcement of the Libra cryptocurrency, governments, regulators and central banks around the world have had to accelerate their plans and approaches regarding cryptocurrencies.” He concluded that they must consider the possibilities that crypto currencies not issued by governments could “dramatically” interrupt finance and payments.
Once again, it is observed how cryptocurrencies are taking hold of the financial world. Examples like the Fed, with its FEDNow project, and now the People’s Bank of China, make it evident that businesses worldwide are increasingly venturing into the cryptocurrency world.
By Willmen Blanco