China- On Thursday, the Central Bank of China mentioned that the surging price of bitcoin drives the interest in China’s digital yuan project. Even though cryptocurrency is effectively prohibited in the world’s second-largest economy.
However, China’s digital yuan is an example of the central bank digital currency (CBDC) which targets to replace the cash on the circulations.
Notably, the People’s Bank of China (PBOC) is finding its way to advance cashless payments. Well, it is efficiently a digital version of fiat currency. Since 2014, the central bank has been working on this digital currency part.
Wang Xin, PBOC research bureau director mentioned the market interest in the digital yuan is “very strong and everyone is paying close attention.”
Wang also mentioned, “On one hand, this is related to more and more central banks in the world participating in the development of domestic digital currencies.”
Central banks around the world which involves the U.K., Japan, Switzerland, and Sweden are currently exploring and issuing their own digital currencies. Well, China in this case is arguably the furthest ahead.
Wang exclaimed, “On the other hand, this (interest) may also be related to the large increase in the price of bitcoin.”
The price of the bitcoin is hitting record highs in the past few months. This year alone, it has more than doubled. However, China’s digital yuan is not like bitcoin.
However, the latter is a so-called decentralized cryptocurrency that means it doesn’t have a central authority like the central bank for controlling it. Well, Bitcoin specifically works on a technology called the blockchain. At this point, it is quite unclear what the digital yuan will be based on.
Over the past few years, Chinese authorities have now cracked down on bitcoin. In the year 2017, Beijing has banned so-called initial coin offerings which is a way to issue a new digital token and raise money. However, the government has also cracked down on businesses involved in cryptocurrency operations like exchanges.
In the last month, China’s Inner Mongolia region has banned new cryptocurrency mining projects in order to clean up its energy consumption.
Digital yuan pilot ahead
Till now, the PBOC has not yet given a timeline for the nationwide rollout of the digital yuan. Further, it has carried out a number of real-world pilot projects in different cities around China.
However, this takes the form of lotteries where people in these cities may apply to get a slice of a pool of digital yuan and then spends it at participating retailers.
In February, over the Chinese Lunar New Year, authorities have handed out around &1.5million in Beijing. Moreover, the other major cities involve Shenzhen and Chengdu that have had their own trials.
Wang mentioned that the pilot is “increasing, and also expanding in scope.” He hinted that at moral trails to come.
He mentioned, “Next, we will push ahead with digital RMB pilots, and accumulate more experience,”