While Chinese authorities are cracking down on crypto, the People’s Bank of China (PBOC) is busy creating its own cryptocurrency. Recently, a senior official at the bank said that the bank is “close” to issuing the state-backed digital currency. A Chinese digital currency could have far-reaching implications on the world of finance.
What Is the Chinese Central Bank Planning?
According to Mu Changchun, the deputy director of the payments department at the PBOC, the central bank has been working to create a digital currency system since 2018.Speaking at a China Finance 40 Forum event during the weekend, he said that the digital currency is set to replace cash in circulation of M0. It would have no impact on M2, or the monetary policy and credit policy of the country. The launch of the new crypto coin will make China one of the pioneers in state-backed digital currency.
The bank has been researching digital coins for about 5 years and is concerned about offerings like Facebook’s Libra, which do not come under its purview. The bank strongly supports the idea of putting cryptocurrencies under strict central bank oversight.
China’s Dominance in the Crypto Sector
China is still the home of the most notable mining facilities in the world owing to cheap power and the existence of the biggest mining company Bitmain. While the government has cracked down on this industry, Sichuan, Xinjiang and Yunnan provinces remain popular for crypto mining activities. Several crypto startups have also developed out of China, including the largest crypto exchange Binance, which has shifted base to Malta.
The central bank will not just monitor digital currency trends at home and overseas but will also “expedite the research of China’s legal digital tender” as noted by the bank in its recent statement. Details about the timing of the digital asset launch were not revealed.