Forbes reported today that a former employee of China Construction Bank said that the Chinese central bank will launch a government-backed cryptocurrency and issue it to seven institutions in the coming months. Paul Schulte is currently an independent researcher and was the head of global financial strategy at China Construction Bank before 2012. He said that Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China, Alibaba and Tencent, and China UnionPay will be the first to obtain this cryptocurrency.
Another source confirmed that the seven institutions involved in the development of the cryptocurrency called DC/EP (Digital Currency/Electronic Payments) will receive the new asset when it is launched, adding that there is another (The eighth) institutions may also become the first users. The source declined to name the other company. The source, who declined to be named, confirmed that the technology behind the cryptocurrency has been ready since last year and could be launched as early as November 11th, China's busiest shopping day, Singles Day.
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According to sources, at the time of launch, the agency will be responsible for distributing the cryptocurrency to 1.3 billion Chinese citizens and others who use the renminbi. The source added that the central bank hopes to establish contact with Western correspondent banks and ultimately allow consumers in the US and elsewhere to use their digital currency. According to sources, this is still under planning and will not be implemented immediately.
It is not the first time on a global scale to distribute such a central bank's digital currency through large Chinese companies. For example, Libra, which Facebook plans to launch, will be supported by a basket of currencies issued by central banks, as well as companies such as Mastercard and Uber in the US, Vodaphone in the UK, and Mercado Pago in Argentina. Last week, Bank of England Governor Mark Carney also proposed a new currency supported by a number of central banks to replace the dollar as a global reserve currency.
Schulte believes that the difference between China's DC/EP and Libra and Carney's SHC (synthetic hegemonic currency) is that Libra is just an early computer code, SHC seems to be only in the concept stage, and China's cryptocurrency is ready. It’s a good launch. Schulte said:
"China is vigorously promoting reforms and launching cryptocurrencies. This will be the first central bank to do so."