China’s apex bank has reportedly completed the necessary development of the national cryptocurrency and is drafting a bill on how to distribute the digital currency.
China Working on Digital Currency Distribution
Despite the ongoing coronavirus pandemic originating and affecting the Chinese economy, the People’s Bank of China (PBoC) has reportedly finished the basic development of the central bank-issued digital currency (CBDC). At the moment, the PBoC is drafting legislation for the circulation of the cryptocurrency.
According to the Chinese publication Global Times, the PBoC is closer to issuing its CBDC. A source close to the apex bank told the publication that the central bank, in partnership with the private banks in the country, has finished the development of the sovereign digital currency’s essential function. The drafted bill will now pave the way for the circulation of this digital currency.
The insider told Global Times that central banks around the world are entering negative territory or cutting interest rates to zero in order to boost liquidity into the market as a result of the coronavirus (COVID-19) pandemic, China will now use this time in order to push forward with the launch of its cryptocurrency.”
The next step for the apex bank is the legislation of the digital currency and working with the insurance and banking regulators to decide how to supervise them. However, this step could be lengthier than the development of the digital currency, the insider added, therefore, posing uncertainties regarding the exact date that the digital currency would be launched.
Experts in the country are calling for the PBoC to accelerate the development of the digital currency. The director of the Advanced Research Institute of Blockchain under the Yangtze Delta Region Institute of Tsinghua University, Cao Yan, urged the central bank to hasten the issuance of the CBDC due to the unprecedented coronavirus pandemic.
PBoC Working On Its CBDC Since 2014
The PBoC has been researching the possibility of launching its central bank-issued digital currency since 2014 as it looked for ways to reduce the costs of circulating traditional paper money and to boost policymakers’ control of money supply.
In August last year, the deputy director of the central bank’s payments department, Mu Changchun, revealed that the development of the CBDC was almost ready. However, PBoC Governor Yi Gang, later came out to issue a statement clarifying that there is no timeline for the launch of the Digital Yuan yet. He added that the central bank needs more time to carry out further research, testing, assessments, trials, and risk prevention for the digital currency.
According to officials of the PBoC, the Digital Yuan will utilize a two-tier system, with the apex bank and financial institutions serving as legitimate issuers of the currency. Changchun revealed that the Digital Yuan would be unlike Bitcoin and other stablecoins currently present in the cryptocurrency space. He also added that they have finished the superior design, standard formulation, in-depth research and development, and joint testing and debugging of their digital currency.
China has been strict on cryptocurrencies over the past few years, banning cryptocurrency trading and related events in the country. The ban on cryptocurrencies in China could be a move to eliminate competition for the Digital Yuan when it finally launches.