There is no timetable for the launch of China’s digital fiat currency, Yi Gang, governor of the People’s Bank of China (PBOC), said Tuesday at a press conference, citing the need for more research and evaluation.
Why it matters: China’s digital currency has been in the works for five years, and it is viewed as a frontrunner in the global race. The June release of Facebook’s whitepaper on its stablecoin project has ramped up pressure on central banks around the world to accelerate their digital currency research. Speculation has been swirling recently about how and when DC/EP, China’s fiat digital currency, will be launched.
Details: “We don’t have a timetable at the moment, there will be a series of research, testing, trials, evaluations, and risk prevention work,” Yi said at the press event during a celebration commemorating the 70th anniversary of the People’s Republic of China.
- Cross-border transactions also have to meet anti-money laundering, anti-terrorism financing, anti-tax evasion, know-your-customer, and other regulatory requirements, Yi added.
- The aim of DC/EP, according to Yi, is to partially replace M0 or money issued directly by the central bank. It will adopt a two-tier structure that involves the central bank and commercial banks, but will not change the current path of currency supply, said Yi.
- The central bank insists on a centralized approach for managing the DC/EP system, and has not decided on a specific technology, Yi said. Both blockchain technology and new innovations based on the existing electronic payments will be considered.
Context: Mu Changchun, then-deputy chief of central bank’s payment and settlement, said in August that the digital currency is nearly ready, but did not give a timeline.
- A Forbes report from end-August cited multiple sources who said the launch of the digital currency could happen in November. The sources also said Chinese commercial banks and payment companies such as Alibaba and Tencent would be among the first institutions to receive DC/EP for distribution. The central bank refuted both assertions last week.
- The central bank has been concerned about the threat that Facebook’s Libra poses for its digital currency project and plans to expand the Chinese yuan’s globalization. A German newspaper reported last week that Facebook’s Libra currency basket will not include China’s legal tender.
- The central bank appointed Mu the new head of digital currency research earlier this month.