The Chinese government is working on its own digital currency. Very little is known about this project so far. In a recent press release, the country’s central bank offered some intriguing details. It seems this currency will be similar to Libra, although it has nothing to do with social media.
A Mobile Currency
While very little is known about China’s digital currency, some crucial information has come to light this week. A PBoC spokesperson confirmed the currency will be sued across major payment platforms. For starters, it will be compatible with WeChat and Alipay in China. Both of these platforms are major players in the financial sector. Particularly Alipay continues to make inroads on a global scale.
This seems to confirm the digital currency will be mobile-oriented first and foremost. A smart decision, as mobile devices and payments are gaining popularity nearly everywhere. It is not unlikely mobile payments will rival or even outperform payment cards in a decade from today. Being prepared for that potential shift is never a wasted effort. Making the currency compatible with such major platforms is a crucial first step in the right direction.
Protecting Monetary Sovereignty
Perhaps the most remarkable statement regarding this currency was issued by Mu Changchun. Changchun is the PBOC’s deputy director of the payments department. While he confirmed mobile and electronic payment solutions are being developed at an accelerating rate, issuing a digital currency still makes a lot of sense. Changchun confirmed this option is explored to guarantee China’s monetary sovereignty.
If the whole world were to adopt the Libra, Bitcoin, or any other form of money, very little would change for China. Even today, the nation heavily relies on the US Dollar, which has been a problematic affair for some time now. The ongoing trade war between the US and China will not allow this situation to improve either. By maintaining monetary sovereignty, the PBoC acknowledges something needs to change. Actively countering the US Dollar seems to be the most viable plan of action at this time.
A 2019 Launch Remains Plausible
Another interesting tidbit of information revolves around the launch date of this new digital currency. While no official timeline exists, there is a tentative date floating around. It seems China may launch its digital currency as early as November 11, 2019. That would be a remarkable feat of strength if true.
While it is fun to speculate regarding this date, there are still plenty of questions to be answered. No one knows exactly what this currency is supposed to be backed by. The Yuan seems like an odd choice, as the PBoC continues to devalue this currency every few months. Backing it by the country’s vast – and growing – gold reserves would make a lot more sense. One can only hope things become a lot clearer in the weeks and months ahead.
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