A senior official from the People’s Bank of China on Saturday confirmed that the state will soon have its own digital currency, writes The Block .
Mu Changchun, deputy director of the payment and settlement solutions division of the People’s Bank of China, said that a prototype of the digital currency issued by the central bank (CBDC) already exists, and the digital money research group has fully developed the blockchain architecture for it. China's CBDC will not be based on the blockchain alone, as this would prevent its distribution in retail payments.
Changchun noted that the department has been conducting research and development since 2014.
“We can say that the digital currency of the People’s Bank of China is ready to launch,” he said, adding that CBDC will use a two-tier operating structure. – The People’s Bank of China will be at the top level, and commercial banks at the second. The double delivery system satisfies the conditions of our country. "It can use existing resources to increase the enthusiasm of commercial banks and the gradual introduction of digital currency."
A two-tier system is preferred for China because of its complex economy, vast territory, and high population.
“From the perspective of increasing accessibility and the desire of the public to use it, a two-tier structure should be adopted to solve this problem ,” Changchun said.
He also praised the resources, including labor, and the innovative capabilities of commercial enterprises, which would express their willingness to cooperate with the regulator in the process of launching a digital currency.
Chairman of China's national payment system UnionPay, Shaofu Jun, in connection with the latest announcement, noted that it will not be easy to ensure the fulfillment of the goals stated by the People's Bank of China.
Although CBDC is able to solve certain problems of cross-border payments, long delay intervals, low efficiency of traditional systems, insufficient certainty of the operational process and regulatory principles in foreign countries can have a negative impact on the implementation of the initiative.
Publication date 08/11/2019
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