Officials of China’s central bank said that the bank has developed its own digital currency running on blockchain and the currency might launch soon. The news was reported by Bloomberg on Monday.
Over the weekend, Mu Changchun, deputy director for payments at People’s Bank of China (PBoC) in an event hosted by the bank said that nank’s research department has been hard at work since last year to create digital Yuan and the bank may have hit a breakthrough with it.
He said that it is “close to being out.” Bloomberg reported that the deputy director announced currency at the China-Finance Forum held in the city of Yichun, Heilongjiang. Even though he didn’t give a specific timeline for the project, he did say that the launch will happen soon.
Since Libra’s announcement in the middle of June this year, Chinese authorities have been working at a faster pace on this digital yuan project. Chinese government has shown some strong feelings about Libra’s cryptocurrency.
The former governor of PBoC has already said that Libra poses a great threat to the Chinese economy and the Yuan. He was also of the view that Libra will impact not just the local Chinese market but would also have a global impact, it might weaken national currencies by increasing the controlled international business by many countries. In this regard said:
Libra has introduced a concept that will impact the traditional cross-border business and payment system.
Zhou Xiaochuan also said that the government should take the threat seriously as it may unbalance Chinese Yuan, the government should also work on its own form of digital currency. One of the most important statements from his address was to suggest that commercial entities in China should be allowed to distribute and hold digital Yuans. He gave an example of this successful implementation of the concept in Hong Kong.
In the same event as Mu Changchun, another official from the China’s Administration of Foreign Exchange department Sun Tianqi showed his concerns about Libra. According to Tianqi, China should consider Libra a foreign currency and give it under the department of Foreign Exchange’s control to stop any devaluation of the Chinese yuan, he said:
Libra must be seen as a foreign currency and be put under China’s framework of forex management
The digital currency is not supposed to be decentralized, rather it is designed to give Chinese authorities more control over their financial system. According to patents by the PBoC, the digital currency would be available on a mobile wallet and consumers will exchange their Yuan for the digital currency that could be used to make payments.
Essentially every digital coin would be trackable and the government would know every time the coin changes hands. Economic experts had already said that the governments would move towards digital assets. Dave Chapman, the executive director of BC Technology Group Ltd said had already stated:
It is without doubt that with the announcement of Libra, governments, regulators and central banks around the world have had to expedite their plans and approach to digital assets,