According to a senior official of the People’s Bank of China, the state will soon have its own digital currency, which has been working on for five years.
Mu Changchun, deputy director of the payment and Settlement Solutions division of the Central Bank of China, said at a meeting of China Finance 40 Group that work on the prototype of the Central Bank’s digital currency (CBDC) has been completed.
Changchun added that the necessary research and development in this area has been conducted since 2014. He said: “Now we can say with confidence that the digital currency of the People’s Bank of China is ready.”
The digital money Research group was engaged in the creation of a blockchain architecture for the CBDC. It is reported that China’s digital currency will not exist only on one blockchain, because such an approach may prevent its spread in retail payments.
“CBDC will use a two-tier operating structure. It will be similar to the current financial system: the top level will be occupied by the Central Bank of China, and commercial banks will be located on the second level, ” Changchun said.
The two-tier system is suitable for China because of the state’s complex economy, large territory and population. Changchun noted:
“We have certain national characteristics, and the dual delivery system fully corresponds to them. It makes it possible to use current resources to stimulate commercial banks and gradually integrate digital currency into the financial system. A two-tier structure should be adopted to increase its accessibility and encourage the general public to use it.”
Changchun also praised the resources, including labor and technology, that will be provided by commercial enterprises in the process of cooperation with the regulator to launch a digital currency.
The chairman of the national payment system of China UnionPay, Shaofu Jun, noted that it will not be easy to achieve all the goals set by the People’s Bank of China.
CBDC does have the ability to solve a number of problems related to cross-border payments. However, long delays, low efficiency of traditional systems, insufficient certainty of the operational process and regulatory principles in foreign countries can create barriers that prevent the implementation of the conceived plans.
Earlier, the head of the research bureau of the People’s Bank of China (PBoC) Wang Xin said that the Central Bank is forced to accelerate the development of its own digital currency due to the risks associated with the imminent appearance of Libra.
“We cannot allow one leader to appear in the world – the US dollar. In this case, America will become the main boss in the financial world, which will provoke a series of economic, financial and international consequences, ” Wang said at the time.