China’s central bank is nearly ready to issue its own sovereign digital currency, according to Mu Changchun, deputy director of the payments department of the People’s Bank of China (PBOC). As reported by Bloomberg, Mu said the institution’s virtual currency was “close to being out”.
Mu emphasized the PBOC’s intention that the digital currency would replace M0, or cash in circulation, rather than M2, which would generate credit and impact monetary policy. The digital currency would also encourage circulation of yuan locally and internationally.
Since the announcement of Facebook’s Libra Project published in June, China has been speeding up the development of its virtual currency. Early in July, former PBOC governor Zhou Xiaochuan warned that the social giant’s digital currency would pose a threat to payments systems and national currencies.
Zhou said the Chinese government needed to “make good preparations and make the Chinese yuan a stronger currency.” He added that the official digital currency should be issuable by “commercial entities,” just like HK dollars.
Wang Xin, head of the research bureau at the PBOC, also said that the central bank was paying full attention to Libra Project and was working hard to complete its own cryptocurrency project.
According to reports, several patents filed by the PBOC have indicated how the project would work. The patents’ details suggest that the ongoing project addresses a technology that issues a digital currency, as well as offers a digital wallet to store and trade the virtual currency in an “end-to-end” fashion.
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