China’s central bank fast-tracks R&D of its legal digital currency

The People’s Bank of China noted that they are going to track the development trend of virtual currencies of China and foreign in order to strengthen Internet financial risk remediation.

After mulling over its centrally owned digital currency, China accelerated its research and development, according to the statement released by the People’s Bank of China on August 2.

The process of creating China’s own digital currency escalated as soon as Facebook announced the plans and whitepaper of their Libra project. However, the future of the Libra project is uncertain since the US Senate and regulators expressed concerns.

According to reports, China’s legal digital currency will be issued by the central bank and might replace banknotes. With the central bank issuing the digital currency, it would serve as a hurdle for the people wishing to indulge in illicit activities and also help transform and upgrade the financial infrastructure of the country.

Even though a lot has been said about this digital currency being developed to challenge Libra, deputy dean of the Institute of Capital and Finance of China University of Political Science and Law, Wu Changhai, noted that Libra cannot replace or impact China’s fiat currency. According to him, due to the existing state governance model, it would be impossible for a stablecoin like Libra to replace the digital currency of China.

Wu Changhai was quoted in Beijing News saying:

“The legal digital currency is a substitute for banknotes. It is issued by the central bank. The general encrypted digital currency itself does not have a monetary function. The government cannot hand over the currency distribution rights to a company. This idea is impossible to achieve for a long time. “

China’s digital currency could play a major role in financial tech across the world as it already boasts a vast mobile payments market. With Tencent’s WeChat Pay and Alibaba’s Alipay that deal with data of nearly 2 billion accounts among them, China could dominate various Asian markets. Facebook might have a larger user base but, due to the current environment, the company might not be able to release Libra in 2020 as per the earlier plan.