The Countdown to Launch
The People’s Bank of China (PBoC) is gearing up to unveil its digital currency, and it seems like it’s been a bit of a rollercoaster ride. After five years of intensive research that kicked off in 2018, PBoC’s deputy director Mu Changchun recently announced at a forum that they’re almost at the finish line. And while we’ve all been twiddling our thumbs, PBoC’s persistent testing has been quietly happening behind the scenes — they’re like the unsung heroes of the monetary world.
Libra: The Inspiration Behind the Initiative
Interestingly enough, you might find it amusing that the PBoC’s plans were reportedly influenced by the announcement of Libra, the ambitious cryptocurrency proposition by Facebook. Talk about a little sibling rivalry! Director Yang Dong from Renmin University noted that the announcement stirred quite the buzz among regulators and made a case for more private sector players to hop on board the currency’s development. Who knew a social media giant could inspire an entire nation’s financial strategy?
Brook’s Law: More Testing Required!
Like any good project manager knows, testing is key. Yang suggested that the PBoC is still fine-tuning its pennies before launching the digital currency into the wild. The upcoming trials will involve a variety of players, both private and state-owned. It’s like bringing together a committee that consists of your favorite characters from every sitcom ever made, each contributing their quirks to the show.
The Bright Future of CBDC
Usage of this new digital legal tender is expected to benefit the economy significantly. Shao Fujun, chairman of China UnionPay, praises the CBDC’s potential to track the flow of money better, enabling more robust monetary policy making. Yet, he warns that global coordination on exchange rates might present a considerable hurdle. It seems like this digital marvel walks hand in hand with some challenges, which is a bit like expecting a unicorn in your backyard only to realize it needs a vet visit.
The Framework: Heavyweight in Control
The PBoC will retain full control of the digital currency, 100% backed by reserves from commercial institutions — think of it as financial deep-sea diving with heavy gear. For citizens, it’ll be easy to exchange this currency as they would with a friendly neighborhood bank teller. As Mu pointed out, multiple institutions are taking their own paths in developing the underlying tech for the CBDC, drawing at least some similarities to Libra’s structure. In fact, in the world of finance, things are getting a little flashy with Binance launching another blockchain project targeting stablecoins, also vying for the digital currency crown.
