The Central Bank of China is accelerating the development of its own crypto currency.
According to the director of the National Bank of China Research Department Wang Xin, who said this during a seminar at Peking University, the development program "digital juan" has already been approved by the Council of China. country.
In its development, commercial structures are included, so that the new product is competitive on the market. The head of the Central Bank said that the financial regulator carefully follows the development of the global crypto currency Libra, whose creation was recently announced by Facebook.
Earlier, the deputy director of the Bank of China's Department of Payments and Transfers, Mu Changchun, wrote in his section on the financial review of Caixin that the crypto currency, including Libya, should be regulated by the central banks.
Probably the very possibility of the emergence of the real international payment tool has pushed the Chinese authorities to accelerate their work so as not to miss the opportunity to actively participate in the creation of a new global financial system. .
For several years now, the Chinese authorities are working to develop their own crypto currency. The Bank of China already owns 78 patents in the field of crypto currency and another 44 patents relating to blockchain technology [blockchain].
Earlier, Central Bank Vice President Fang Yifei noted that the digital yuan should replace the monetary apparatus M0 [l’argent liquide en circulation]. Gradual abandonment of cash is an obvious and especially visible global trend in China, where mobile payments are already prevalent in daily purchases of the population. It is therefore quite likely that the Chinese authorities want to create a full analogy in the fiduciary yuan.
So far there has been little information about the progress in creating a crypto-yuan. However, after Facebook published the White Book on Libra, Chinese officials worked hard.
What about the benefits of the Scales?
The fact is that the currency of Vage, which Facebook has announced very differently technically and conceptually from other crypto currencies, including Bitcoin. The balance will be controlled by a consortium of dozens of major financial and technology companies, including Visa, Mastercard, Paypal, eBay, Uber and Lift. This consortium will also be responsible for the process and issuance of a new crypto. The balance is a "stable corner" that will be provided with reliable funds: deposits and securities of several countries with reliable currencies.
In other words, Libra is considered a means of supranational payment. SDR – special drawing rights – today are closest to the analogy. But, unlike these, the Libra must be perfectly liquid exchange assets with cross-border payments that are available to the vast majority of the planet's population, which would take a few seconds.
Following the 2008 crisis, China proposed the creation of a new global reserve currency on the basis of SDRs in order to free up dependence on the dollar. That's why the Libra concept appeals globally to China, explains Sputnik Liu Dongmin, director of the World Financial Center at the Institute of World Economy and Finance at the Chinese Academy of Social Sciences.
"From a standpoint of maintaining the stability of the international monetary system, transnational currencies as the main means of international payments are a relatively good solution. Compared to the sovereign currency, this currency will better ensure global financial stability. But such projects have not yet been implemented, the expert adds.
Hegemony of dollars in international payments is being criticized by many countries, including China. However, linking the prices of different products and services to the single currency, the dollar, was practically in international trade. The Vaga concept, on the other hand, is right, but it could also create many problems.
For example, the White Paper suggests that the currency of the Libra can easily be converted into a fiduciary currency. However, the agents of the consortium of management are private companies that physically can not provide enough cash. Only central banks have this possibility, which is why Libri need financial regulators to function normally, says Liu Dongmin.
Central banks in different countries must develop regulatory measures for Libra. Moreover, if this crypto currency is promoted as a means of payment around the world. Because each global currency, regardless of its basic principles, will affect the monetary sovereignty and financial security of individual countries. For example, when it comes to monetary sovereignty, the global currency crypt could replace the weak currencies of some countries and gradually eliminate them. Individuals will try to pay a more stable world currency, which will further push the price of national currencies. "
The sovereignty of the national currency can be more effectively protected by the creation of a national digital currency that corresponds to current trends in financial development, says the expert. If China launched digital yuan, it would be the first national currency cipher in the world that is guaranteed by a stable fiduciary currency.
Attempts to create national crypto currents have already been taken. For example, Venezuela has launched El Petro collateral with oil. But, given the economic situation of Venezuela, El Petro can hardly claim the status of international payments.
The situation with the digital yuan is different. The Cryptoanan issued by the Central Bank of China, with all the technical advantages of the crypt, could earn a trust on the world markets and significantly increase the level of internationalization of the Chinese currency. And if the Libra or some other supranational currency is started, China, given its experience and capabilities, can influence the implementation of the operational rules of the new international financial system.