The People’s Bank of China has stepped up efforts to launch its own cryptocurrency seeking to gain leadership before other central banks of the world and maintain its financial sovereignty, reports The Global Times.
The Chinese Central Bank is planning to carry out a series of tests with the system called Digital Currency Electronic Payment or DCEP in some cities, such as the Shenzhen Technology Center, in the southern province of Guangzhou.
The latter will host tests with the participation of some of the largest banks in the country and telecommunications operators, reports the state media citing Caijing Magazine. The test will start later this month and will continue in 2020.
The e-commerce giants Alibaba and Tencent will also participate, according to the report.
Next year will see increased competition between digital currencies not only from central banks, but also between multinationals such as Facebook and large cross-border financial institutions, according to Cao Yin, deputy director of the Blockchain Advanced Research Institute.
The expert said that the People’s Bank of China accelerated its digital currency project after Facebook announced last June its plans to launch its digital currency, Libra, which is being supported on a 2.7 billion user base and, having independence from all financial institutions, could trigger a threat to the flow of financial capital.
“China needs to have equivalent ‘monetary instruments’ to consolidate its financial sovereignty,” said Cao.
Protect monetary sovereignty
Last September, a senior official of the Chinese Central Bank announced that the digital currency that is set to launch in the country will have some similarities with the cryptocurrency Libra of Facebook.
Mu Changchun, deputy director of the payment department of the People’s Bank of China, said that the development of that new currency will help protect the country’s monetary sovereignty, while stressing that it will be as safe as the notes issued by the Central Bank and that can be used even without an Internet connection.
On the other hand, Mu explained that the new cryptocurrency will allow a balance between allowing anonymous payments and preventing money laundering.
Translated by JRE/EF