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As it has been reported by the People’s Bank of China (PBOC), the country’s digital yuan is fully ready for trials.
It seems China was really serious when talking about its digital currency. Even though China was trying to forbid cryptocurrency mining and trading, for the last three months it is in the process of creating its own.
Head of the People’s Bank of China’s (PBoC) Digital Currency Research Institute, Mu Changchun, stated that the country’s digital yuan is finally ready for trials. The central bank digital currency (CBDC) will, as per the announcement, not come as a volatile asset like Bitcoin or some other known stablecoins, and will not be pegged for currency basket as the back-up.
Will It Be as Libra or Not?
Even though this might be interesting, the reactions are pretty divided. Some Chinese investors seem to be pretty disappointed because they want to speculate. However, at the financial meeting in Beijing last weekend, Changchun said:
“The digital yuan is used to spend, not for speculation. It does not have the characteristics of bitcoin speculation, nor does it require a basket of assets to support its value like stablecoins.”
“At present, the digital currency DCEP [Digital Currency Electronic Payment project] of the People’s Bank of China has basically completed the top-level design, standard formulation, functional research and development, joint debugging and testing.”
Chinese media reported that the next step includes starting with the pilot programs for the currency, but they haven’t given any concrete date or time. However, when this phase is done, the final plan is to issue the currency through traditional lenders which would then disperse the CBDC to the public.
Let Us Speculate, It’s More Fun That Way
As we’ve already mentioned, public reactions were pretty dispersed. One user of social media platform Weibo explained that if China doesn’t let him to speculate on the digital form of the yuan, he will speculate on other things, like foreign exchange. Another user said simply that cannot see any fun in this.
Even though in October, Chinese President Xi Jinping was pretty bullish when we talk about blockchain, he stressed that blockchain is not the same as crypto.
But, it seems that officials from China do not agree on what CBDC should look like after all. When China just started mentioning the currency, it was really presented as a digital currency similar to Libra. That is why David Marcus said that he knew something like this would happen, referring to him being grilled by the Senate. Then he said that if Facebook doesn’t make suck a currency, somebody else will. When China mentioned CBDC, he said that it was exactly what he predicted.
However, it is true that back then Changchun said that the new digital currency will have similarities to Facebook’s proposed Libra coin. He explained it then that it would be as safe as central-bank issued paper notes and could be used on platforms such as Tencent’s WeChat and even without an internet connection.
Then, just a month later, in October, Xi gave a speech saying China needs to “seize the opportunities” presented by blockchain, in what appeared to be one of the first instances of a major world leader backing the tech.
Be it as it may, there are plenty of positive sides of China issuing its digital currency. It will for sure help the country’s financial watchdogs, which would be able to detect criminal activities such as money laundering, tax evasion, and any other kind of fraudulent activity. The only thing official has to make now – is to agree on how this currency is going to look like.