Chinese officials and experts say China is testing a number of ways to launch China's first central bank digital currency (CBDC), and they expect the private sector to be more involved in creating government-backed currencies.
Based on ongoing trials in some regions, the time to introduce CBDC is nearing maturity. But experts close to the Chinese central bank said on Monday that Facebook’s announcement of its digital currency, Libra, could prompt Chinese regulators to reconsider the possible model of CBDC.
Mu Changchun, deputy director of the Payment and Settlement Department of the People's Bank of China (PBOC), said in a forum a week ago that after five years of research, the Chinese central bank is almost ready to launch its own digital currency. He said that the central bank began its system development work in 2018.
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- According to the Odaily Planet Daily report, Mu Changchun said at the China Financial Forty Forum that the central bank's digital currency is about to be launched and will adopt a two-tier operating system, that is, the upper layer is the People's Bank of China and the second is the commercial organization. The reasons are as follows: 1. The central bank's digital currency is bound to face the retail scene and face the public, while the performance of Bitcoin and Libra cannot meet the high concurrency. After research, it decided to adopt a two-tier system; 2. The big country issued the central bank digital currency is Complex system engineering; 3. The IT infrastructure application and service system of commercial banks and other institutions is relatively mature, the user base is huge, the service habits have been developed; the talent reserve is sufficient, and there are many IT experts; the system has strong processing capacity. Some experience has been accumulated in the application of financial technology; 4. It can avoid excessive concentration of risk on a single individual; 5. Single-layer launch will lead to “financial disintermediation”. Directly placing the digital currency directly on the public will have a crowding-out effect on commercial bank deposits, affecting the ability of commercial banks to lend; in extreme cases, it will also subvert the existing financial system, and the central bank will fight the world's “great unity” situation; The double layer will not change the creditor-debtor relationship of the currency in circulation, and will not change the existing money delivery system and the dual account structure; it will not affect the existing monetary policy transmission mechanism; 7. The central bank will not presuppose the technical route, any advanced Technology can be used for central bank digital currency research and development; electronic payment and central bank digital currency boundary is blurred; it can fully mobilize market forces and achieve system optimization through competition.
Experts predict that if all goes well, the digital currency supported by the Chinese government may be earlier than the official release of Libra.
The central bank's initial plan may have been influenced by Libra, the digital currency plan proposed by the world's largest social network, Facbook, in June. Yang Dong, director of the Center for Financial Technology and Internet Security at Renmin University of China, told China Daily that this led to discussions among Chinese financial regulators, prompting designers to rethink the involvement of more NGOs in the CBDC development and distribution process. Mode.
Yang Dong said, “Before the official launch of China’s CBDC, further testing is needed to get inspiration from Libra.”
“The next pilot project should focus on non-government and cross-border scenarios using CBDC. Multiple participants, including private and state-owned enterprises, can join the process with the central bank.” Yang Dong added, he declined to say The specific name of the pilot company.
Shao Fujun, chairman of China UnionPay and former official of the People's Bank of China, said that the potential forms and plans of CBDC are diverse and are still under discussion. “It will have many positive effects, including tracking financial flows in economic activity and supporting the development of monetary policy.”
However, Shao Fujun said that he also faces difficulties, such as the international coordination of currency and exchange rate policies.
“The situation we are in is like a horse race. Several designated agencies will adopt different technical routes to develop digital currency and electronic payments. Winners will be the ones who have the best methods and are accepted by the public and the market. So this It is a process of market competition.” Mu Changchun stressed that the digital assets must be placed under the supervision of the central bank.
As described in Facebook's white paper, Libra will “get full support for physical asset reserves”. It also plans to build a global network of 27 companies and entities as founders, including the world's long-established payment giants Visa and Mastercard. The goal of the network is to eventually include 100 members before it is released in 2020.
China's CBDC will be controlled by the central bank, and residents will be able to exchange digital currencies in commercial institutions. According to the central bank official, CBDC also received 100% support from the reserves paid by commercial institutions to the central bank.
Mu Changchun said that, to some extent, Libra's organizational structure is very similar to that of the central bank's design for its digital currency and electronic payment systems.
In the work plan for the second half of this year, the central bank said it will speed up research on China's legal digital currency and monitor the development trend of domestic and foreign virtual currency.
This article from the China Daily , the original author: Chen Jia
Odaily Planet Daily Translator | Yu Shunzhen