{"id":112663,"date":"2019-08-28T03:10:24","date_gmt":"2019-08-28T10:10:24","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=112663"},"modified":"2021-04-22T12:04:38","modified_gmt":"2021-04-22T11:04:38","slug":"central-bank-of-china-to-launch-digital-currency-within-months-in-fight-to-retain-control-over-monetary-policy","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/central-bank-of-china-to-launch-digital-currency-within-months-in-fight-to-retain-control-over-monetary-policy\/","title":{"rendered":"Central bank of China to launch digital currency within months in fight to retain control over monetary policy"},"content":{"rendered":"<p>The People\u2019s Bank of China (PBOC) will roll out China\u2019s sovereign digital currency, DC\/EP, as early as November this year, distributing it to seven institutions including Alibaba, Tencent, and the four largest banks in the world, two separate sources told <a href=\"https:\/\/www.forbes.com\/sites\/michaeldelcastillo\/2019\/08\/27\/alibaba-tencent-five-others-to-recieve-first-chinese-government-cryptocurrency\/#608b0e111a51\">Forbes<\/a>.<\/p>\n<p>Paul Schulte, a former executive at China Construction Bank and Lehman Brothers Hong Kong, said the currency will initially be issued to the Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China, the Bank of China, Alibaba, Tencent, and Union Pay. The banks are the largest four in the world by <a href=\"https:\/\/www.thebanker.com\/Top-1000-World-Banks\/Top-1000-World-Banks-2019-The-Banker-International-Press-Release-for-immediate-release\">total capitalization<\/a> in their listed order.<\/p>\n<p>A second, unnamed source reportedly working on DC\/EP backed up Schulte\u2019s claim, adding that a mystery eighth institution could also receive the coin and that the digital currency has been ready to launch for over a year.<\/p>\n<p>Mu Changchun, one of the key officials behind the digital currency, said the PBOC\u2019s prototype \u201ccompletely adopted blockchain architecture,\u201d but claimed the cryptocurrency could not support the levels of transactional throughput required to replace cash in a country with more than 1.3 billion citizens. The final version of DC\/EP, Forbes reported, is capable of a whopping 300,000 transactions per second using a non-blockchain architecture.<\/p>\n<h2>A long time coming<\/h2>\n<p>China began research for a sovereign digital currency in 2014, but the state now seems to have been pushed to the wall in its plans to launch\u2014not only by the threat cryptocurrencies like Bitcoin may pose to China\u2019s monetary sovereignty and ability to monitor its citizens, but also by the announcement of corporate stablecoins like Facebook\u2019s Libra.<\/p>\n<p>Libra\u2014a multi-asset-backed, globally ambitious stablecoin sponsored <a href=\"https:\/\/cryptoslate.com\/facebooks-cryptocurrency-libra-whitepaper-reveals-blockbuster-partnerships\/\">primarily by U.S. corporate giants<\/a>\u2014has been widely construed by governments as a <a href=\"https:\/\/cryptoslate.com\/libra-may-be-canceled-due-to-regulatory-concerns-facebook-tells-investors\/\">threat to capital controls and competitive markets<\/a>. As a one-party state economy traditionally <a href=\"https:\/\/www.weforum.org\/agenda\/2019\/05\/why-chinas-state-owned-companies-still-have-a-key-role-to-play\/\">reliant<\/a> on domestic consumption, strict currency controls, and the success of its many state-owned enterprises, China would likely be one of the least receptive markets for such a coin.<\/p>\n<p>China\u2019s precarious stance on cryptocurrency would say as much. Over the years the Chinese state has put in place opaque and often contradicting legislation\u2014crypto exchanges have been outright banned from operating in the nation since 2017, for example, and yet <a href=\"https:\/\/cryptoslate.com\/chinese-court-upholds-legal-bitcoin-ownership-btc-protected-china-property-law\/\">a ruling in July<\/a> recognized Bitcoin as being protected under the country\u2019s \u201cvirtual property\u201d law.<\/p>\n<figure id=\"attachment_110183\" aria-describedby=\"caption-attachment-110183\" style=\"width: 300px\" class=\"wp-caption alignright\"><a href=\"https:\/\/cryptoslate.com\/chinese-court-upholds-legal-bitcoin-ownership-btc-protected-china-property-law\/\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-110183\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2019\/07\/china-bitcoin-social-300x158.jpg\" alt=\"Chinese court upholds legality of Bitcoin ownership, BTC protected by China\u2019s property laws\" width=\"300\" height=\"158\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2019\/07\/china-bitcoin-social-300x158.jpg 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2019\/07\/china-bitcoin-social-768x403.jpg 768w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2019\/07\/china-bitcoin-social-1024x538.jpg 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2019\/07\/china-bitcoin-social.jpg 1200w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><figcaption id=\"caption-attachment-110183\" class=\"wp-caption-text\">Related: <a href=\"https:\/\/cryptoslate.com\/chinese-court-upholds-legal-bitcoin-ownership-btc-protected-china-property-law\/\">Chinese court upholds legality of Bitcoin ownership, BTC protected by China\u2019s property laws<\/a><\/figcaption><\/figure>\n<p>Despite Beijing\u2019s ambiguous approach, the appeal of Bitcoin and other decentralized and censorship-resistant cryptocurrencies has been seen to be <a href=\"https:\/\/cryptoslate.com\/chinas-influence-over-price-bitcoin\/\">increasing steadily amongst Chinese investors<\/a>, who have seemed to flock to BTC during periods of geopolitical uncertainty. In a guarded admission, the Deputy Governor of the PBOC <a href=\"https:\/\/www.yicai.com\/news\/5395409.html\">stated<\/a> one of DC\/EP\u2019s advantages would be in \u201ccurbing the public\u2019s demand for private encrypted digital currency.\u201d<\/p>\n<p>As such, DC\/EP takes form as a bid to tighten the PBOC\u2019s grip on monetary control, while aiding Chinese banks in their power struggle against domestic mobile payment platforms. Together, mobile payment providers Alipay and WeChat dominate up to <a href=\"http:\/\/www.chinadaily.com.cn\/a\/201903\/21\/WS5c932294a3104842260b1cc9.html\">90 percent<\/a> of market share in China, and the PBOC\u2019s new digital currency could lure back cash deposits and customers, the <a href=\"https:\/\/www.scmp.com\/business\/banking-finance\/article\/3023309\/chinas-proposed-digital-currency-will-help-banks-bridge\">South China Morning Post<\/a> reported.<\/p>\n<h2>Catalyzing adoption amongst China\u2019s 1.3 billion citizens<\/h2>\n<p>In light of China\u2019s unique economic situation, the PBOC just weeks ago <a href=\"http:\/\/news.cnstock.com\/news,bwkx-201908-4414590.htm\">unveiled<\/a> a \u201cdual delivery system\u201d for DC\/EP intended to accelerate adoption amongst the nation\u2019s vast population. Per the system, commercial institutions would purchase the digital currency from PBOC using Chinese Yuan in return for distribution rights. Changchun <a href=\"http:\/\/news.cnstock.com\/news,bwkx-201908-4414590.htm\">described<\/a> the scheme as follows:<\/p>\n<blockquote><p>\u201cThe People\u2019s Bank of China is the upper level and the commercial banks are the second level. This dual delivery system is suitable for our national conditions. It can use existing resources to mobilize the enthusiasm of commercial banks and smoothly improve the acceptance of digital currency.\u201d<\/p><\/blockquote>\n<p>As such, the seven (or eight) institutions should receive the coin as early as Nov. 11, and will immediately be tasked with dispersing the currency to China\u2019s billion-plus citizens, the anonymous source told Forbes.<\/p>\n<p>DC\/EP will at first replace China\u2019s M0 supply (physical money in circulation,) and <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-12-13\/china-s-plan-to-sideline-bitcoin\">according to PBOC patents seen by Bloomberg<\/a> could allow the central bank to monitor all transactions. With Bitcoin as an evidently popular and comparably untraceable alternative, the rollout of DC\/EP may pose the ultimate litmus test for Chinese citizens\u2019 appetites for privacy and financial autonomy.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The People\u2019s Bank of China (PBOC) will roll out China\u2019s sovereign digital currency, DC\/EP, as early as November this year, distributing it to seven institutions including Alibaba, Tencent, and the four largest banks in the world, two separate sources told Forbes. Paul Schulte, a former executive at China Construction Bank and Lehman Brothers Hong Kong, [&hellip;]<\/p>\n","protected":false},"author":175,"featured_media":112669,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,76747,61045,32631],"tags":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Central bank of China to launch digital currency within months in fight to retain control over monetary policy<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/central-bank-of-china-to-launch-digital-currency-within-months-in-fight-to-retain-control-over-monetary-policy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Central bank of China to launch digital currency within months in fight to retain control over monetary policy\" \/>\n<meta property=\"og:description\" content=\"The People\u2019s Bank of China (PBOC) will roll out China\u2019s sovereign digital currency, DC\/EP, as early as November this year, distributing it to seven institutions including Alibaba, Tencent, and the four largest banks in the world, two separate sources told Forbes. 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