Reports coming out of China say the country’s central bank is making progress with its plans to create a sovereign digital currency. However, the People’s Bank of China (PBOC) is yet to release any official timetable for the roll-out of the proposed digital yuan.
Meanwhile, commentators continue to assert that China’s digital currency plans are part of efforts to prevent the widespread adoption of public cryptos like bitcoin (BTC) as well as private virtual currencies like Facebook’s Libra. Several central banks are also making efforts to launch their own state-issued digital currencies.
No Launch Date Set for China’s Digital Currency
According to the South China Morning Post, the PBOC issued a statement on Sunday (January 5, 2019) declaring that progress was being made on the development of digital yuan currency. The statement was part of the central bank’s annual work conference detailing the PBOC’s activities for the last year.
Despite providing proof of ongoing work on the proposed central bank digital currency (CBDC), the PBOC did not elaborate on a likely timeframe for the release of the digital yuan. Back in 2019, reports stated that China’s digital currency would likely launch in November 2019 but those rumors turned out to be false.
Also, details about China’s digital currency remain scarce with inside sources so far declining from providing concise commentaries about the project. Back in 2018, Blockonomi reported that the PBOC was recruiting digital
Beijing Wants to Combat Bitcoin and Libra Adoption in China
Despite the dearth of details about China’s proposed digital currency, one thing is clear — Beijing wants to counter cryptos like bitcoin and Libra. One key evidence for this assertion is that chatter about the project increased in intensity following the release of the Libra white paper back in mid-2019.
China was among the first nations to criticize the project citing monetary control concerns. At the time, Beijing railed against Libra’s plan to create a stablecoin backed by a basket of fiat currencies, saying such a digital currency could contribute to capital flight from mainland China.
The heightened chatter around China’s digital currency plans also came at a time when the government was actively promoting blockchain technology adoption. President Xi Jinping declared in October 2019 that blockchain will become a “core” technology in the country. Critics of China’s pro-blockchain stance said the country will not seek to promote the more decentralized aspects of the technology.
Various state and pollical media organizations were also waxing lyrical about blockchain utilization in China. However, this wave of positive blockchain sentiment did not extend towards crypto with the country’s government firmly maintaining its “blockchain, not crypto stance.”
As previously reported by Blockonomi, the renewed crypto crackdown saw five cryptocurrency exchanges being forced out of business. This fresh virtual currency prohibition seemed to focus on over-the-counter (OTC) digital asset trading desks.
China did remove Bitcoin mining from a list of prohibited industrial activities. However, several provinces in the country are demanding that crypto miners reduce their energy consumption during the dry season months to allow for ample power supply for retail consumers.
Central Banks Looking at Sovereign Digital Currencies
Several central banks have also come out to confirm or deny reports of developing their own CBDCs. Back in November 2019, Blockonomi reported that sovereign digital currency efforts were experiencing a surge following China’s reported eagerness to accelerate its digital yuan plans.
Stakeholders at the European Central Bank (ECB) and the European Union (EU) as a whole have also called for the creation of a digital Euro. Some policymakers argue that such a move is necessary to not only combat private cryptos like Libra but to also stay apace with China in the emerging digital economy landscape.
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