Mu Changchun, the head of the digital currency research institute at the People’s Bank of China (PBoC), has revealed more details about the country’s upcoming digital yuan.
At a forum in Hong Kong on Wednesday, as reported by Reuters, Mu said that China’s digital currency is designed to substitute existing coins and paper money and its holders will not receive interest payments. Therefore, the digital currency will have no implications for inflation or monetary policy, Mu added.
The official further said that the PBoC will first issue digital currency to commercial banks and other institutions, who will then resend it to the general public.
“During the research period, and also the issuance period there will be a horse race approach. The front runner will take the whole market – who is more efficient, who can provide a better service to the public – they can survive in the future,” Mu said.
In September, when the official gave details about the digital currency, he said that its design will be similar to Facebook-led proposed stablecoin Libra and that it could also be used across major payment platforms such as WeChat and Alipay.
While China does not yet have a timetable for the launch of its digital currency, it is preparing to be the first country to roll it out, after 5 years of research and development.