Yesterday, a governor of the People’s Bank of China (PBOC), Yi Gang, outlined plans for its upcoming central bank digital currency (CBDC). Despite rumored launch dates, Yi said that the bank has no timetable for its CBDC release. Interestingly, he suggested the PBOC is considering a blockchain-based currency after all.
After his speech on China’s economic status, Yi Gang was asked by reporters about the digital currency’s status. Yi made four key points: what the CBDC will be, its goals, how it will be issued, and when.
He first reiterated that the PBOC has been looking at digital currencies since 2014, and has made positive progress. “The goal is to replace a part of M0, that is to say to replace a part of cash, it is not to replace M1 or broad money M2,” Yi stated.
The ‘digital cash’ will hence require an electronic payment system. The state-owned card issuer, UnionPay, provides the clearing system for payments giant Alipay. Both organizations are said to be involved in the CBDC’s dispersal.
This relates to Yi’s third point, the distribution of the digital currency. He confirms that it will be a “two-tier operating system” in which the central bank gives the currency to commercial firms, which then issue it to consumers.
Like previous statements from PBOC officials, he does not mention any companies on the second issuing tier. Alipay owner Alibaba and UnionPay are among the rumored seven issuing firms, according to Forbes. The same report claimed that the currency could launch as early as November.
However, Yi Gang said: “As for when you can ask for it, we don’t have a timetable.”
Yi reveals that the currency is reliant on further research, testing, and piloting. The PBOC does not “presuppose technical routes” which leaves room for the bank to “consider blockchain technology or evolve on the basis of existing electronic payments.”
This is an interesting comment, since another official, Mu Changchun, claimed the PBOC is “ready” for launch. Beijing News said at the time that it is unlikely to be blockchain-based. However, Yi seems to be saying that they are still at a stage where blockchain technology is under consideration.
Facebook’s Libra announcement likely motivates the comments of Mu and the active discussion of the CBDC in China. The planned digital currency is said to have caused the PBOC to speed up its own preparations, in fear of being left behind.