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China central bank: digital currency issuance a “horse race”, won’t need bank accounts

renminbi digital currency yuan

Yesterday, Mu Changchun, deputy director at the People’s Bank of China (PBOC) and director of its Digital Money Institute, spoke at Hong Kong Fintech Week. The central bank official described digital currency issuance as a “horse race” and said that China’s digital Yuan won’t need bank accounts.

Mu previously made statements regarding Facebook’s Libra shortly after its announcement. Two months later, he launched a training course on digital currencies and the Facebook project, outlining his concerns in a 24,000-word text. As the head of China’s central bank digital currency (CBDC) initiative, he claimed the PBOC was “ready” for its launch in August.

The September training course revealed that it would not be linked to any bank account, and will be stored in a smartphone digital wallet. However, rumored issuers AliPay and WeChat do need a bank account, and many of the others are consumer banks.

Speaking in Hong Kong yesterday, Mu confirmed that “Actually, it could be decoupled from the traditional bank accounts. Thus, those who don’t have bank accounts in China can still open a digital wallet and enjoy mobile payment services in China.”

The CBDC would also not bear interest rates. This paves the way for foreign tourists or citizens of Belt and Road nations to use the digital Renminbi. As Hong Kong’s central bank signed a deal with the PBOC just yesterday, it could become instrumental in offshore issuance.

Mu added: “in the future, the process of digital currency issuance will be the way of horse racing, the leader will win the entire market; who is more efficient, who can better serve the public, who it will survive in the future; if a front-runner takes the lead in taking action, the technology they use will be adopted by other parties.”

Though it is unclear whether Mu is referring to a race between nations or local technology providers, China’s CBDC appears to be winning on both fronts. It’s likely to be the first major central bank to issue its currency, according to a foreign exchange official, and yesterday partnered with Huawei on top of its five years of research.

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