After five years of silence, in August last year, China released some information about its economic plan aimed at launching a digital currency. In addition to this, the country’s central bank (Banco Popular de China) recently authorized the start of testing of a payment system similar to the Brazilian PIX. This news may indicate that the Chinese currency will be launched soon.
Forbes magazine reported a few months ago that China would opt for a two-step strategy. In this strategy, the People’s Bank of China would develop a digital currency that would be distributed shortly thereafter to the main financial institutions in the country, including the 5 largest banks in the country and associated with Union Pay, in addition to large technology companies, such as Alibaba and the Tencent.
This payment system, which is currently restricted to a select group of creditors, includes digital portfolios with a number of features; how to convert between cash and digital tokens; checking account balance; payments and remittances.
Chinese government objectives
In 2019, the head of the Payments and Agreements Division of the People’s Bank of China, Mu Changchun, went public to explain a little more about how the currency would be implemented.
The executive said that despite blockchain technology being one of its foundations, the Chinese government has decided to dispense with the decentralization generally applied to cryptocurrencies.
China’s intention is to implement a processing capacity of up to 300,000 transactions per second, which would not be possible if the blockchain structure were fully applied. With this, the Chinese government will be able to have more control over transactions that, incidentally, should have a very high flow.
The digital currency will be backed by the yuan and will allow international use. The Chinese government hopes that some economic objectives will be achieved with this plan, such as protecting its monetary sovereignty against Facebook’s Pound and saving on the circulation of large amounts of paper money in the country.