– The People’s Bank of China calls for accelerating the research and development of China’ legal digital currency in the second half of 2019
– Technical problems, free flow under renminbi capital, and illegal use of digital currency are difficulties in issuing a central bank digital currency
Official Digital Currency DC/EP
The People’s Bank of China (PBoC) is now calling for speeding up the process of developing China’s legal digital currency (DC/EP) in the second half of 2019, reported Beijing News.
On August 2nd, at the central bank’s work video conference, it talked about accelerating the pace of the research and development of its own digital currency DC/EP in the second half of 2019.
The idea of the central bank to issue digital currency was already deployed when Zhou Xiaochuan was the governor of the People’s Bank of China (who served from 2012 to 2018) and the digital currency research institute was established, said Huang Zhen, director of the Institute of Financial Law at the University.
Currently, the central bank is organizing market institutions to engage in corresponding work.
In fact, Facebook publishing the white paper for its digital currency Libra in June triggered the attention of financial regulatory authorities.
Major Challenges with Issuing a Digital Renminbi
As for the how the legal digital currency announced by the central bank can be positioned, Wu Changhai, deputy dean of the Institute of Capital and Finance of China University of Political Science and Law, said the issuance of virtual currency, under the existing state governance model does not replace or have any impact on the fiat currency.
“The legal digital currency is a substitute for banknotes. It is issued by the central bank. The general encrypted digital currency itself does not have a monetary function. The government cannot hand over the currency distribution rights to a company. This idea is impossible to achieve for a long time,” Wu Changhai said.
As for the difficulties in issuing a central bank digital currency, Wu Changhai said currently, there are three major challenges to issue digital renminbi; technical problems, free flow under renminbi capital, and illegal use of digital currency.
“But what technical support is used for digital currency, and what is the positioning, has not yet been fixed. It takes time to reform and upgrade the financial infrastructure. The central
bank must support the institutions that can be controlled to participate. Private enterprises may be difficult,” Huang Zhen said.