China PBOC is soon going to reveal the launch of its CBDC and surprise the world.
China, one of the world’s most technologically advanced nations is finally set to launch the pilot of it’s much anticipated digital currency. The People’s Bank China (PBoC) is going to conduct the 1st real-world test of its digital currency (CBDC). The updates have come through a local media outlet Caijing on Dec 9th.
Reportedly, the year-end of 2019, would witness the initial pilot launch of Central Bank-backed digital Yuan in two cities- Shenzhen and Suzhou. The People’s Bank of China along with other 4 major commercial banks and three major telecom giants would together execute the trail of the new payment project. However, the details of the partners are not yet disclosed in the report.
PBOC Set to Bang On to Lead the Race
China is ostensibly proceeding towards becoming a leader in the era of global digital currency scenario and probably trying to beat the forthcoming Facebook Libra.
Lately, China’s banking sector has undergone a major change and following the westernization like never before. The banking sector in China believed to be the world’s largest in terms of assets, with US40.1 Trillion total assets in the 1st quarter of 2019.
Allegedly, for the pilot, China is possibly including the partaking of seven state-owned companies. This includes the “BIG FOUR” commercial banks: Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, the Agricultural Bank of China together with the participation of three telco giants- China Telecom, China Mobile, and China Unicom.
Earlier, during Hong Kong Fintech Week, Mu Changchun, deputy director at the People’s Bank of China (PBOC) and director of its Digital Money Institute, described digital currency issuance as a “horse race” and communicated that “China’s digital Yuan won’t need bank accounts.” Meaning, those who don’t have bank accounts in China can still open a digital wallet and enjoy mobile payment services in China.
Caijing in the report mentions that in Shenzhen, CBDC is expected to manage by each bank differently which would stir up the competition amongst each other, to prove the most happening individual model for future adoption.
The pilot would be implied in the real world. Meaning, the application and acceptance of digital currency implementation in real scenarios such as education, healthcare, and transportation. The “horse race” towards the mainstream adoption of digital currency pilot named digital currency/ electronic payment (DC/EP) can certainly be projected as a catalyst.
“One step will be to rationally select the pilot verification area, scenario and service scope, and steadily promote the introduction and application of a digital form of fiat currency… Compared with the previous pilot, this time the central bank’s legal digital currency pilot will go out of the central banking system to enter the real service scenarios…”
China’s CBDC’s Race Against Facebook Libra
China is geared up to start the process by the end of 2019. Per the information, at the onset, 1st two pilot stages would commence at a smaller level by this year’s end. During 2020, the second phase of trial would likely be seen on a bigger level. After the pilots, if everything drives well, the full launch of DC/EP is likely on the cards.
China, the home of the world’s largest tech giants such as Huawei, Baidu, Tencent, and Alibaba is trying to beat Facebook’s effort to launch its stablecoin Libra project. The accelerating effects of Libra can be very well judged by everyone who seeks knowledge and is in the community of the cryptocurrency ecosystem, when Changchun voiced opinions about Libra project white paper and spoke about the immediate launch of CBDC in August 2019, in its training course.
On Sep 4th, news broke out about the training course named “Technology Finance Frontier: Libra and Digital Currency Outlook” released by Changchun.
Reportedly, Changchun also commented on the possible disruptive power of Facebook’s cryptocurrency Libra.
“It is not excessive to regard Libra as a potential world-class monetary change… If this change is not handled well, it is likely to be a huge hidden danger.” Mu wrote while agreeing with U.S. lawmakers (via Google Translate).
Facebook Vs China Digital Yuan
Facebook has announced the launch of Libra in June 2020. Libra stable coin is proposed to be pegged with the basket of fiat currencies including government bonds and possibly other options as well.
Interestingly, PBOC was trying to develop the CBDC from 2014. However, the Central Bank of China speeded up its efforts soon after Facebook’s Libra launch announcement, to launch China’s DC/EP which is reportedly guessed as a similar concept rivaling to Libra and would allegedly replace physical cash in circulation and at the same time maintain the “anonymity and portability.”