China’s Central Bank Takes the Lead in Digital Currency Revolution

The Race for Digital Currency

As the world moves toward a digital future, nations are scrambling to keep up. In this race, China’s central bank has declared its intention to lead, with industry expert Huang Qifan betting on its success. His faith in the People’s Bank of China (PBoC) could be what sets the tone for a financial revolution.

A New Era for the Renminbi

During the 2019 Bund Financial Summit, Qifan expressed his dissatisfaction with existing international payment systems like SWIFT, which he labeled as ‘outdated’ and ‘inefficient’. He mused, “SWIFT is an outdated, inefficient and costly payment system… the technology has been updated slowly and the efficiency has been relatively low.” Isn’t it about time, then, that we bid farewell to these cumbersome methods?

PBoC’s Digital Currency Journey

China’s venture into the world of digital currency began with a bang in August 2020, when the central bank announced that it was ready to roll out the digital renminbi. But wait! In September, they backpedaled, stating that a specific launch date was still up in the air. This back-and-forth has left many scratching their heads. Are they ready, or are they still figuring it out?

Regulatory Foundations for a Digital Future

To further bolster their digital currency, the Standing Committee of the National People’s Congress recently passed a new law regulating cryptography, set to take effect in January 2020. What does this mean for the digital renminbi? It’s rumored to be a critical step toward getting the CBDC off the ground. After all, what’s a digital currency without a solid back-end?

Understanding the CBDC Landscape

Critics have been quick to point out that the Chinese digital currency isn’t a true cryptocurrency. According to reports from August, the currency will operate on a two-tier system that lacks full decentralization. In a world where Bitcoin and Ethereum reign supreme, will a centrally-controlled digital currency earn the respect it seeks, or will it be viewed as merely a fancy version of existing systems?