Headquartered in Beijing, the People’s Bank of China (PBOC) has put a halt on all the speculations about the launch of the country’s sovereign digital currency.
On Tuesday, at a press conference focused on commemorating the 70th anniversary of the People’s Republic of China, the notable governor of PBOC, Yi Gang stated that there is no timetable for the launch of China’s digital fiat currency. Gang revealed that the primary reasons for the delay are the regulatory issues which still remain unaddressed. He even cited that there is a need for more research and evaluation before the digital currency comes into play in the financial arena.
Yi Gang quoted during the event that “We don’t have a timetable at the moment, there will be a series of research, testing, trials, evaluations, and risk prevention work.” The leader mentioned that the cross-border transactions have to comply with the regulatory requirements dealing with anti-money laundering, anti-terrorism financing, anti-tax evasion, and KYC norms.
Yi further added that the primary objective of DC/EP is to work as the perfect replacement for M0 or the money issued directly by the central bank of the country. He added that the new digital currency will follow a two-tier structure that involves the central bank and commercial banks and will also induce no change in the currency supply path.
As per Yi, the central bank emphasizes to follow a centralized approach for operating the DC/EP system but has not decided on a specific technology. He stated that the organization is considering blockchain technology as well as new advancements based on current electronic payments for its digital currency platform.
China is the first major economy that will be launching its sovereign digital currency setting a benchmark for others. The nation has been engaged in the work of its digital coin for as long as five years now. The release of the whitepaper of Facebook’s Libra project has triggered the central banks and legal authorities across the globe to take their digital currency research a notch higher.
Since the launch of cryptocurrencies, China has not been a forefront player in this new-age transacting pedagogy. This became evident when, in 2017, the country-imposed bans and barred people from buying, selling, and trading in virtual currencies. Also, crypto exchanges were pulled off during this phase and access to foreign exchanges was restrained through the Great Firewall.
However, in the current scenario, crypto is seen as a property under the country’s legal frame, although there are certain crypto-related activities that are considered illegal in China. Amid these restrictions, OTC trading has helped popularize cryptocurrency in the Chinese territory. This is largely lubricated by VPNs, offshore exchanges, and stablecoins like Tether’s USDT.
With such contrasting outlook of authorities towards crypto, the launch of DC/EP will surely be a highly-anticipated for the global economy.