Blockchain, Cryptocurrency

The Digital Yuan to Protect State Syndication on Cash

A top Chinese central bank official reveals from a report that Central bank digital currencies (CBDCs) like the Chinese digital yuan project may well bring the centralization of money to a whole new level.

In the said report, addressed by People’s Bank of China (PBoC) deputy governor Fan Yifei for the bank’s Financial News newspaper, it was presented clearly that the primary goal of the digital yuan project is to support the state’s monopoly on money production, the South China Morning Post reported yesterday.

The deputy governor emphasized that money creation is an individual responsibility for the central bank and that the digital yuan will fall under the PBoC’s “centralized management.”

As stated in the report, the remarks from the PBoC point that the Chinese government “will maintain full control of data about issuance, circulation and transactions of the digital yuan.” The new policy runs counter to what decentralized cryptocurrencies are and is possibly a deal-breaker for users concerned about financial privacy.

There was no mention in the article regarding any official launch date for the digital yuan. Nevertheless, according to one Japan-based China observer, the digital yuan’s launch is now “imminent,” with multiple private companies concerned in nationwide pilot projects that are already underway.

The deputy governor also reiterated that developing a digital currency is something the central bank is doing to counter private initiatives such as Facebook’s proposed Libra token.

The digital yuan is an attempt at preventing “the loss of money minting power in the digital era, and to ensure that currency issuance always serves overall national development and reform,” the PBoC deputy governor wrote.

Whereas a fan said that acceptance of the digital currency would be made obligatory in China, he noted that it would not instantly replace cash, as that would “create a huge waste,” without improving payment efficiency.

The highlight on the centralized properties of the new digital currency comes after several Chinese media outlets in articles earlier this year distanced the digital yuan from bitcoin (BTC), saying it “is not bitcoin or ethereum,” and will not lead to a rise of crypto in the Middle Kingdom.

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