The growing efforts of digital currency in one of the world’s largest economies have attracted a lot of attention as a lot of ripple effects that will follow in the project’s wake.
Especially, one of the most influential economic figures of China that ever had has made their first comments on the topic, recent publicly waxed on the style of how the digital yuan will be implemented.
Two types of central bank digital currencies
On November 26th, Zhou Xiaochuan, the former governor of the People’s Bank of China (PBoC), offered his new digital yuan remarks at the Caixin Hengqin Forum.
Zhou Xiaochuan, the former governor of the People’s Bank of China
According to that, having two types of central bank digital currencies:
“The first type is Central Bank Digital Currency (CBDC), which emphasizes electronic payment and retail-oriented, while the second is intended for some international financial institutions to create conditions for cross-border payment and remittance.”
The first CBDC in China
Zhou, who headed the central bank from 2002 to 2018, revealed that the crypto yuan will be mainly for domestic retail payments. He also added that it needs extensive testing to avoid any possible detriment to the overall economy.
There have also reported that China will use the digital currency to repress online gambling. But Macau, gambling in the country is banned although there are little underground operations using cash.
In August this year, the central bank unveiled a design philosophy that requires a two-layered operational system – with commercial banks on the first, retail and business on the second layer.
On the other hand, earlier this month, CNBC noted that the nation could issue its cryptocurrency as early as the next two to three months. The PBoC is allowed by The Digital Currency Electronic Payment (DCEP) to launch the currency to commercial banks and third-party payment networks Alipay and WeChat Pay.
Moreover, it is said that the state can and will be easily monitored all crypto transactions. Particularly, Yi Gang, CEO of the current central bank hinted that the digital yuan was intended to replace the vast amount of cash in circulation.
Besides, PBoC Digital Currency Research Institute Head, Mu Changchun shared that a country’s currency as a key element of its national sovereignty, therefore, great care must be taken in developing the digital yuan lest a monetary crisis later occurs.
As RT anchor Max Keiser said, the new DCEP of China maybe gold-backed which makes it became a great threat to the dollar dominance. Additionally, the devaluation of greenbacks plays right into China’s plans of weaponizing its own currency.
Read more:
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