China is all set to launch its own digital currency, while it can be called cryptocurrency, it is only so in the namesake because it will not use a blockchain. It is planned and strategized only to beat the other digital currencies in the market.
Last weekend a senior official from the People’s Bank of China (PBoC), Changchun Mu said in a Press Conference which was closed doors that the country’s Central Bank Digital Currency (CBEC) is ready to launch. It was informed that the Central Bank Digital Currency (CBEC) would be issued by the central bank in terms of the digital currency which will be available only to the commercial banks and the banks will in turn issue it to the public.
Changchun Mu said that this two-tier issuance system was initiated because it will help maintain the dominance of the countries official currency Chinese what in this respect here is what Changchun Mu said, “the two-tier issuance system will be helpful to restrain the public’s demands for crypto-assets and strengthen the country’s sovereign currency.”
This close door press conference can be said to be a mere introductory session for the Central Bank Digital Currency (CBEC) as the specifics regarding the digital currency was not addressed in the Press Conference like the date of its launch, will it be optional or mandatory for the Chinese consumers and various others queries.
The People’s Bank of China digital currency research lab was officially launched in 2017 and since launch, the lab has now filed more than 50 patent application applications and 20 of these applications focus specifically on the so-called digital currency wallet
The aim of the People’s Bank of China digital currency research lab is to build a very secure and safe wallet for its users. The goal is to make payments through digital currencies as simple as any other digital payment on any other platform. The storing of the digital currency in the wallet will be as simple as storing money in any of the e-payment applications. The digital wallet will process privacy settings and will be quite easy and safe for the customers to use. It will be not as volatile and as risky s other digital currency payments wallet.
One of the patent applications filed clearly states that the aim of the Central Bank Digital Currency (CBEC) would be to bridge the gap between the existing cryptocurrency payment wallet and the one launched by the People’s Bank of China in terms of privacy and security issues.
Below is the excerpt from one of the patent applications filed:
“The emergence of digital currency is an inevitable trend. So far, privately issued digital currency bears the features of anonymity and volatility. Central banks must take their impacts on the payments, monetary systems, and financial stability seriously. As such, it’s inevitable for central banks to push for digitized fiat currencies to optimize their circulation.”
Another very important application of the Central Bank Digital Currency (CBEC) as pointed out by Changchun Mu in his speech was that the existing Banknotes and coins, i.e. the currency rotating in the market are subject to money laundering as well as they can also be used in terrorism financing as well. The Central Bank Digital Currency (CBEC) system will put an end to all such practices and create an anti-money laundering and anti-terrorism financing which the currency rotating in the market is subjected to.
On the issue of the blockchain Changchun Mu had explained the following in his speech:
“Our payments network during last year’s Singles’ Day sale at its peak handled 92,771 transactions per second. In comparison, bitcoin and ethereum handle seven and 10 to 20 transactions per second, respectively. [Facebook’s] Libra, based on its recently released white paper, is 1,000 transactions per second. For a country as big as China, it’s impossible to achieve high scalability by purely relying on the blockchain. As such, we have decided to remain technologically neutral and do not necessarily rely on one fixed technological path.”
Changchun Mu has clearly stated that though the digital currency is all about de-centralization, Central Bank Digital Currency (CBEC) will follow the system of centralization.