According to a senior official of the People’s Bank of China, the state will soon have its own digital currency, work on which has been carried out for five years.
Mu Changchun, deputy director of the payment and settlement solutions department of the Central Bank of China, said at a meeting of China Finance 40 Group that work on a prototype of the Central Bank’s digital currency (CBDC) has been completed.
Changchun added that the necessary research and development in this area has been ongoing since 2014. He said: "Now we can say with confidence that the digital currency of the People’s Bank of China is ready."
The blockchain architecture for CBDC was created by the digital money research team. It is reported that the digital currency of China will not exist on only one blockchain, because this approach may hinder its distribution in retail payments.
“CBDC will use a two-tier operating structure. It will be similar to the current financial system: the Central Bank of China will occupy the upper level, and commercial banks will be located on the second, ”Changchun said.
A two-tier system is suitable for China due to the complex economy of the state, large territory and population. Changchun noted:
“We have certain national peculiarities, and the dual supply system fully corresponds to them. It provides an opportunity to use current resources to stimulate commercial banks and the gradual integration of digital currency into the financial system. A two-tier structure should be adopted to increase its accessibility and encourage the general public to use it. ”
Changchun also praised the resources, including labor and technology, that commercial enterprises will provide in the process of cooperation with the regulator to launch digital currency.
Chairman of China's national payment system UnionPay, Shaofu Jun, said that achieving all the goals that the People's Bank of China has set for itself will not be easy.
CBDC really has the ability to solve a number of cross-border payment problems. However, large delays, low efficiency of traditional systems, insufficient certainty of the operational process and regulatory principles in foreign countries can create barriers that impede the implementation of plans.
Recall that earlier the head of the research bureau of the People's Bank of China (PBoC) Wang Xin said that the Central Bank is forced to accelerate the development of its own digital currency due to the risks associated with the imminent appearance of Libra.
“We must not allow one leader to appear in the world - the US dollar. In this case, America will become the main boss in the financial world, which will provoke a series of economic, financial and international consequences, ”Wang said then.
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