The People’s Bank of China (PBOC) is planning to launch a state-backed cryptocurrency by the end of the year. According to a report by Shanghai Securities News, the upcoming cryptocurrency was announced today in a closed-door PBOC planning session, the third China Financial Forum of 40 People.
Mu Changchun, the deputy director of the PBOC payment and settlement division, says the upcoming digital currency has been in development for the past five years.
According to the report, instead of implementing a “pure” blockchain, Mu Changchun says the new digital currency/electronic payment (DC/EP) will be “ledger agnostic” and designed to scale for small-scale retail and high-frequency business scenarios.
“He said that the issuance of digital currency in a big country such as China, using a pure blockchain architecture, could not achieve the high concurrency performance required by retail.
Therefore, it was finally decided that the People’s Bank should maintain technical neutrality and not presuppose technical routes, that is, not necessarily rely on a certain technical route.”
“The People’s Bank of China first converts digital currency to banks or other operating agencies, and then converts them to the public. This is a two-tier operating system.”
Morgan Creek Digital founder Anthony Pompliano regards the PBOC announcement as an indication of the advancement of digital currencies on the world stage.
“While the US is holding congressional hearings about digital currencies, reports are surfacing that China will be ready to test their own digital fiat system by the end of the year. One country is suffocating innovation, while the other is pushing the pace of innovation.”
Dovey Wan, founding partner of crypto-asset investment firm Primitive Ventures, notes that the PBOC meeting marks a turning point for the emergence of digital assets.
“Other part of the meeting is rather boring, basically re-iterate on why it has to be centralized and why it has to be compatible with the current ‘central bank – commercial bank’ model…
We are transitioning from the era of digitalization of fiat currency into the era of digital currency (both sovereign and non-sovereign).