Mu Changchun, the head of the central bank’s digital currency research institute revealed the ideas on Chinese cryptocurrency. According to the expert, the new government project will focus specifically on people who live in areas that are not served by the existing banking system, commonly referred to as the “unbanked”. He further highlighted that around 800 million people are within this category.
According to Mu Changchun, the asset is intended to replace the existing fiat. As said by the representative of PBoC, the digital currency will however not cause negative consequences in the country’s monetary policy.
PBoC will begin the distribution of digital currency from commercial banks and other institutions. Subsequently, the latter will introduce a new financial instrument to the common public. Recall that earlier, a list of companies and organizations was provided that would likely help distribute the national cryptocurrency of China.
According to Mu Changchun, the digital currency will process small retail transactions and unlikely to compete with either Alipay or WeChat Pay.
However, Primitive Ventures’ partner Dovey Wan suggests that Alipay, Wechat, and Huawei are likely to participate in the digital Renminbi ecosystem.
To map out Chinese tech giants’ known/likely involvement in DCEP/Digital RMB 👇🏻
Wechat- invoice factoring, tax reporting, payment
Alipay- commercial banking, money market, payment
Huawei- hardware wallet, e2e networking, PBoC private cloud
Commercial banks are distributors
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) November 5, 2019
For example, Wechat company will be able to engage in factoring and tax reporting solutions, Alipay will concentrate on banking, capital markets, and payments. Huawei will be engaged in a hardware wallet development, E2E testing, etc.
With the launch of the digital Renminbi, Chinese banks and companies will be forced to compete in retaining their customers. This goal will be achieved through providing users with better service, created to serve using a new form of national money.
The Digital Renminbi Creation Plan
The digital Yuan is possibly the best response for PBOC to challenge the popularity of Bitcoin cryptocurrency, as the central bank is responding to the protection of its sovereign currency.
Digital Yuan is a stablecoin. According to Mu Changchun, in this regard, the country’s authorities may implore other “stablecoins” to comply with the rules for the circulation of cryptocurrencies established by China in the country.
Recall that earlier, Mu Changchun said that the cryptocurrency of the PRC will be very similar to Facebook’s stablecoin, known as Libra. At this moment both assets are rivals. According to Facebook CEO Mark Zuckerberg, the first launched stablecoin will be able to access 1.7 billion potential users.
At the same time, another country followed the example of China. Recep Tayyip Erdoğan, a Turkish politician serving as President of Turkey since 2014, said that by 2020 testing of the digital Turkish Lira will be complete.