At a time, the currency war between the U.S and China is raging in the name of deliberate weakening of yuan, here comes news that the central bank of China is all set to issue its sovereign digital currency.
Disclosing this, Mu Changchun, deputy director of the People’s Bank of China’s payments department, said the PBOC’s cryptocurrency is “almost ready” for release.
Earlier China was maintaining the stand that cryptocurrency creates disorder as speculators sell off the regular currency and would buy up virtual currency.
In the new system, China might be hoping to create stability with the off-blockchain model.
According to reports, the central bank’s researchers have been working on the currency for five years.
The news comes amidst central bankers worldwide taking a skeptical view of Facebook’s plan to create a cryptocurrency named Libra in association with a consortium of companies including Visa and Uber.
No fixation on Blockchain
The cryptocurrency news from China’s central bank said its digital token will have a two-tier system in which the PBOC and commercial banks will be the authorized issuers at tier 1 and tier two.
The significant part is that PBOC is not fussy about making blockchain the exclusive platform. Rather, it will be technology-neutral.
Blockchain is the main decentralized ledger technology platform guiding most cryptocurrencies including bitcoin.
China's digital currency plan gained traction after Facebook announced details of its Libra cryptocurrency in June.
Wang Xin, head of the research bureau at the PBOC, said in June that the central bank is paying “high attention,” to Libra and would ramp up the development of its digital currency.
China wants more control
However, shunning the decentralized blockchain-based offerings reveals Beijing’s intent to exercise more control over its financial system.
According to reports, the PBOC has already filed 52 patents relating to its digital currency in the name of the Digital Currency Research Lab of the PBoC.
The patents registered by the central bank suggest consumers and businesses have to download a mobile wallet and swap their yuan for the digital money, that could be used to make and receive payments.
The PBOC will track every time money changes hands.
Changchun also said the “blockchain platform just couldn't deliver the throughput needed for retail.”
He said the PBOC’s digital currency will serve as a substitute for M0 –coins and notes in circulation, but not M2, including bank deposits.
Mu said the digital currency would boost the circulation of the yuan internationally.
Bitcoin dip is an opportunity to buy
Meanwhile, at the bitcoin news front, Goldman Sachs has advised investors to capitalize on the current price dip of bitcoin. According to an analyst’s note, the short-term target for bitcoin (BTC) can be $13,971 and investors can buy it in the current scenario.
The analysis said BTC may find support around $11,094, with scope for a higher movement to $12,916, then $13,971.