On Tuesday, Forbes published an article stating that four banks and three payments companies will be involved in the initial release of the Central Bank Digital Currency (CBDC). Today a report in China’s Sina Finance states that ‘sources close to the central bank’ said the information was ‘inaccurate guesses’.
In a separate article we show how recent changes in the clearing of China’s online payments makes implementing a CBDC easier.
The four banks mentioned by Forbes were the four big state banks China Construction Bank, the Bank of China, the Agricultural Bank of China, and the Industrial and Commercial Bank of China. Digital payments companies Alibaba (Alipay) and Tencent (WePay) were also included alongside China’s answer to VISA, state-backed UnionPay.
The latter three organizations account for 98% of China’s online payment market. For a central bank to launch a CBDC, these seven institutions are extremely likely candidates, but the participation of the three digital payments organizations is critical.
All of the firms have quite a bit of blockchain experience.
A different source told Forbes that the launch would be on 11 November, Singles Day in China, which is a major shopping occasion. Anyone involved in technology launches might be surprised at timing a technology launch to coincide with an event with large volumes. Most technical projects aim at soft launches.
We’ve been monitoring this topic on Chinese media and can report that two of the institutions mentioned have given speeches about the CBDC in the last two weeks. One talk was by Shao Fujun, Chairman of UnionPay. Before his current position, he spent three decades at the central bank. He was present when the Governor of the People’s Bank of China proposed studying CDBC in 2015.
In the speech, he said, “To be honest, I have not seen the real digital currency until now.” Commenting on Libra, he noted that “everyone believes that this will pose new challenges to the operation and supervision of the existing financial system.”
Fujun went on to describe the advantages of a CBDC. He said they include the real-time collection of data for implementing monetary policy compared to the current situation with cash, which is hard to monitor.