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China plans to release a new digital currency which would bear some similarities to Facebook’s Libra coin. It would be usable across several platforms like WeChat and Alipay.
In a recent interview with the Shanghai Security News on the 6th of September, the deputy director of the People’s Bank of China, Mu Changchun, stated the purposes and the need for the new digital currency. He stated that the central bank needed to evolve from the use of traditional paper currency and delve into electronic payment methods which are making strong advances around the world. He said that the digital currency would be a realistic way to protect monetary sovereignty and legal currency status, stating that this digital currency initiative was a way of planning for a rainy day.
He also mentioned that digital currency would be as safe as the traditional central bank-issued paper notes and that it could even be used without requiring an internet connection. This offline feature is one of its major selling points as monetary transactions can still be carried out even in the face of communication breakdowns resulting from natural disasters like earthquakes, tsunamis and so on.
In 2014, the Chinese central bank set up a research party to explore the possibilities of a China-based digital currency to reduce the costs of producing and circulating paper money, which in turn would boost policymakers’ control over the supply of money.
Information about the development of this new digital currency was unknown to the public until last month when Mu announced that the innovation was almost ready.
US-based financial magazine Forbes has made claims that the currency would be ready by November 11.
Analysts are saying that the announcement made by social media giants, Facebook on the release of its digital coin, Libra, is the reason for the acceleration of the push towards digital currency by the PBoC.
Mu made mention of how the new digital currency would strike a balance between allowing anonymous payments and preventing money-laundering as compared to Libra. Although the Chinese digital currency may bear some resemblances with Libra, it would possess characteristics that even Libra didn’t have.
Facebook’s Libra
Facebook’s Libra has sparked a lot of worries among global regulators that it could become the predominant digital payment format and could become a medium for money laundering considering the social media’s wide reach.
Libra is said to be a digital currency that would be backed by several real-world assets, including bank deposits and government securities, and it will be held by a network of stewards. The structure of Libra is predicated on promoting trust and to stabilize its price.
Finally, Mu further discussed the superiority of the digital currency over altcoins was that others could go bankrupt and cause its users huge losses. Thus he said, can never be the case of PBoC’s new currency.
Source: https://learn2.trade
