China’s much-anticipated national digital currency is ready, according to the director of the People’s Bank of China (PBOC) Payment and Settlement Division, Mu Changchun, according to Shanghai Securities News. Speaking at the China Financial Forty People Yichun Forum Saturday, Changchun revealed that five years of work has now come to a head and that the digital currency is ready to be rolled out, just days after it was announced that China was pressing ahead with a “lead digital currency” .
The currency, which doesn’t appear to have an official name yet, will run on a two-tier system – the PBOC will convert digital currency to banks or other operating agencies, and then convert them to the public. This two-tier system has a number of benefits:
- Helping with accessibility and adoption in different regions of the country which are at varying stages of technological adoptions
- Helping to resolve risks and avoid excessive concentration of risks.
- Decreases the risk of financial disintermediation
Changchun summarized by saying (translated):
…the People’s Bank of China is the upper level and the commercial banks are the second level. This dual delivery system is suitable for our national conditions. It can use existing resources to mobilize the enthusiasm of commercial banks and smoothly improve the acceptance of digital currency.
Rollout Comes at an Interesting Time
The fact that technical aspects and details of the rollout are starting to emerge reinforces the notion that China is indeed on the verge of adopting a national cryptocurrency, which cannot be underestimated in its impact on the global financial markets, especially at such a sensitive political time. The suggestion that they have been working on it for five years is also interesting, suggesting that the 2013 bull run, which was fueled by Chinese retail investment, left a lasting impression on the government. How the rollout takes and what the reaction is of the users will tell us a lot about how cryptocurrency will be viewed compared to the already popular payment options such a WeChat Pay and Alipay.