How will China’s digital yuan, which is currently under development, compare to bitcoin and stablecoins?
According to the People’s Bank of China’s (PBoC) deputy director Mu Changchun, head of the institution’s digital currency research institute, it will provide no scope for speculating on its value and it will not have the backing of a basket of currencies.
Mu told the South China Morning Post, “The currency is not for speculation. It is different to bitcoin or stable tokens, which can be used for speculation or require the support of a basket of currencies.”
Mu recently said that China’s new national digital currency would operate on a two-tier system, with the PBoC on top, and commercial banks allowed on the second tier of the centralized system.
In November, the PBoC announced that it intends to carry out a pilot with restrictions on large-scale cash transactions that will continue for two years and will be implemented in phases in Hebei Province, Zhejiang Province and Shenzhen City, Cointelegraph reported.
In the same month, Mu made it clear that China is not launching a war on cash by introducing its own digital currency. Rather, Beijing intends for the new currency to complement the paper yuan.
Meanwhile, Cointelegraph reported that China’s central bank is accelerating its efforts to launch the digital token to challenge the United States dollar. It plans to conduct the first real-world test of its central bank digital currency before the end of 2019. Under the watchful eye of the PBoC, four major banks and major economic participants such as China Telecom will reportedly test digital currency payments.