China has been sending mixed signals about its preparedness to issue a national crypto. Despite the new blockchain push, there is still no timeframe for the anticipated launch of the digital yuan and few details have been revealed so far. However, a senior official from China’s central bank pulled the curtain back slightly this week.
China’s Semi-Blockchain Based Currency to Start a ‘Horse Race’
Beijing’s Digital Currency Electronic Payment (DCEP) project, which will be similar to Facebook’s Libra as Chinese officials have previously indicated, will only partially employ blockchain technology as it would need a higher transaction capacity to achieve retail adoption. The People’s bank of China (PBOC) will use a two-tier approach with its implementation, first issuing the currency to commercial banks, which will then distribute it to the public.
Mu Changchun, head of the central bank’s digital currency research institute, told a forum in Hong Kong that the launch will start a “horse race” among banks and other financial institutions competing to offer better and more efficient services with the digital yuan. “The front runner will take the whole market,” Mu predicted. Quoted by Reuters, he added that if an institution takes the lead, the technology it uses will be adopted by others.
People’s Bank of China
The PBOC representative pointed out that as the new digital currency is designed to substitute coins and paper banknotes in circulation, holders of the currency will not receive any interest payments. That means the DCEP system will not affect inflation in the People’s Republic and the monetary policy of its government. At the same time,