Why Chinas Rushing to Mint Its Own Digital Currency

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Summary

In a more distant future, the central bank might use digital currency to help steer the economy. If the digital currency is widely accepted and people are encouraged to hold more cash, bank deposits could decline, but the impact will be manageable, according to a 2018 article from the PBOC’s digital currency research institute. Commercial lenders would deposit 100% worth of reserves at the central bank in exchange for digital currency, which it then distributes to retail users. Mu said in August that the digital cash is “close to being out.” The PBOC has been looking into a digital currency since at least 2014, and it’s been recruiting staff for a dedicated institute. Da Hongfei, the Shanghai-based founder of open-sourced blockchain platform Neo, said he can’t see why the general public would choose the PBOC’s digital currency over something as handy as Alipay. 10.

Article PreviewBy Bloomberg News | Bloomberg September 10 at 11:50 PM

The People’s Bank of China is poised to become the first major central bank to issue a digital version of its currency, the yuan, seeking to keep up with -- and control of -- a rapidly digitizing economy. Unlike cryptocurrencies such as Bitcoin, though, dealing in the digital yuan won’t have any presumption of total anonymity, and its value will be as stable as the physical yuan, which will be sticking around too. Some questions remain, including the impact on commercial banks as well as Big Tech companies such as Ant Financial and Tencent Holdings Ltd. that already offer payment services. Behind China’s rush is a desire to manage technological change on its own terms. As one PBOC official put it, currency isn’t only an economic issue, it’s also about sovereignty.

1. What’s the plan?

Not all the details are out, but according to new patents registered by the PBOC and official speeches, it could work...

Read the full article @ The Washington Post