China Plans to Launch Its Own Digital Currency

China is planning to launch its own digital currency in order to stay ahead of the global competition. The central bank of China has already started approving the proposals to conduct trials in some of the prominent cities of the country. 

China’s central bank popularly known as the People's Bank of China (PBC) has increased its efforts to roll out country’s first Digital Currency Electronic Payment (DCEP), as it aims to stay ahead of the competition among the central banks of the world and also to help preserve financial sovereignty.

The bank is also planning to conduct trials of the digital currency in other cities of the country, mainly the tech hub cities like Shenzhen in the southern Guangdong Province and Suzhou, in the eastern Jiangsu Province. The initial test will be conducted in the end of this month in Shenzhen, which will also involve some of the largest banks in the country and telecom carriers. Later more such tests will be conducted in other areas too in the coming year. 

Domestic Internet giants such as Alibaba and Tencent are also going to participate in the trials. The PBC has initiated the launch, as competition is gearing up among the central banks around the world to leap ahead with digital currency, which is expected to affect a wide range of sectors from financial to retail and trade.

Recently, Governor of France’s central bank, Francois Villeroy de Galhau has announced that its central bank will conduct a test of a digital currency and launch a call for projects by the end of the first quarter of the year 2020.

Cao Yin, who is the Deputy Head of the Advanced Research Institute of Blockchain said that in 2020, digital currency competition would heat up not only among the banks and governments, but also among the multi national companies like Facebook and other financial institutions.

Cao says, “In particular, PBC has accelerated the schedules on the DCEP after Facebook announced its Libra global currency, out of concerns that Libra might take the initiative in the global crypto token contest.”

In June this year Facebook has announced the Libra project, which aims to take on government-issued currencies. But according to Cao, Libra, which has the backing of Facebook’s 2.7 billion-user base and which is independent from all existing financial infrastructures, would also trigger risks of financial capital flow. Bitcoin sparked the same concern in the year 2016.