Recent insights reveal the People’s Bank of China is quickening their efforts to launch a digital yuan, partially in response to Libra, Facebook’s proposed global stablecoin.
Currently, a high-ranking official at China’s central bank is in the spotlight. has confirmed Similar to Libra in various ways, China's forthcoming digital currency will be innovative and unique.
That official, Mu Changchun, who previously guided the payments division at PBoC, now leads the Digital Currency Research Lab, highlighted these parallels during a recent conference speech.
To paraphrase, his lecture had the theme: 'Fintech’s Future: Libra and Digital Currency Potential.'
A New Yuan
During his recent address, Changchun remarked that the imminent central bank digital currency (CBDC) would embody the tangible aspects of cash while allowing greater currency autonomy for the Chinese populace.
'Why embark on a digital currency when electronic transactions abound? The goal is to safeguard our monetary sovereignty and legal currency integrity for future challenges,' he noted.
This declaration follows Wang Xin’s earlier summer comments, where the PBoC researcher emphasized the need for vigilance over Libra, fearing it could cement the USD's global currency dominance.
As Xin said at the time:
If a digital currency complexly intertwined with the USD arises, it might place sovereign currencies alongside USD-centric digital equivalents, potentially leading to the USD becoming the unparalleled leader—a prospect laden with economic, financial, and politically charged outcomes.
Gathering insights from Xin and Changchun, it’s evident China is intent on sidestepping the USD’s pervasive influence, with a digital yuan spearheading this effort.
Nathaniel Popper from the New York Times remarked post-Reuters report on September 6th, 'This seems like it's truly gearing up to become a reality.'
A Chinese digital currency might soon be tangible. A national cryptocurrency is within reach. https://t.co/xnPTD5hfiT
— Nathaniel Popper (@nathanielpopper) September 6, 2019
It might resemble Libra, yet it's a whole different game.
Changchun disclosed that transactions using the digital yuan might not need bank accounts or even internet access.
Users can conduct transactions with the CBDC through near-field communication (NFC), allowing phones to connect; bank accounts won't be requisite, provided a mobile wallet is in place, akin to other cryptocurrencies.
Changchun reflected in this week’s address that in absence of signal, conventional electronic payments falter.
In such environments, Changchun added, not even Libra can match this capability.
The digitized yuan will be functional through giants like Alipay and WeChat, echoing Facebook's partnerships with Visa and Mastercard for Libra.
It's unlikely the USA will roll out a digital dollar anytime soon.
The Federal Reserve, being the central banking entity in the U.S., brings weight to Powell's skepticism about a digital dollar emerging soon. Speaking in Switzerland, Chairman Jerome Powell remarked:
'We are closely examining digital currencies, our current stance is evaluative not proactive. Significant issues remain unsettled for us,' he addressed.
In stark contrast, China’s stance is rather progressive. We must observe how this narrative evolves over time.
