China Announced Central Bank Digital Currency (CBDC)

On Aug 11, 2019

A senior official qt China’s Central Bank announced that the country will soon release its Central Bank Digital Currency (CBDC a cryptocurrency) at China Finance 40 Group on 11 Aug.

Mu Changchun, Deputy Chief in the Payment and Settlement Division of the People’s Bank of China (PBOC) said that the CBDC prototype is already in existence and PBOC’s Digital Money Research Group has fully adopted the blockchain architecture of digital currency. The CBDC will not fully depends upon Blockchain as Blockchain is slow for retail usage.

Changchun revealed that the digital currency is in development since 2014 and after 5 years of hardwork of many developers the currency is almost ready to launch in the market. At the meeting he said “People’s Bank digital currency can now be said to be ready.”

Changchun further explained that the digital currency will use a two-tier operational structure. He added:

The People’s Bank of China is the upper level and the commercial banks are the second level. This dual delivery system is suitable for our national conditions. It can use existing resources to mobilize the enthusiasm of commercial banks and smoothly improve the acceptance of digital currency.

A two-tier operational structure is helpful for the China’s complex economy structure and large population. He said “From the perspective of improving accessibility and increasing public willingness to use, a two-tier operational framework should be adopted to deal with this difficulty,”

Changchun welcome the new innovative business to partnership with CBDC for fast growth. The system will avoid risk and financial instability.

At the same spot China UnionPay Chairman Shaofu Jun said that the goals of CBDC is difficult to achieve. CBDC could solve the problems of cross border payments, long waiting time for confirmation but may face major regulatory problems from different countries.