Central bank digital currencies (CBDCs) like the Chinese digital yuan project may well bring centralization of money to a whole new level, an article by a top Chinese central bank official reveals.
In the article, written by People’s Bank of China (PBoC) deputy governor Fan Yifei for the bank’s Financial News newspaper, it was made clear that the primary goal of the digital yuan project is to defend the state’s monopoly on money creation, the South China Morning Post reported today.
The deputy governor stressed that money creation is a sole responsibility for the central bank, and that the digital yuan will fall under the PBoC’s “centralized management.”
According to the report, the comments from the PBoC shows that the Chinese government “will maintain full control of data about issuance, circulation and transactions of the digital yuan.” The new system runs counter to what decentralized cryptocurrencies are and is potentially a deal-breaker for users concerned about financial privacy.
The deputy governor also reitarated that developing a digital currency is something the central bank is doing to counter private initiatives such as Facebook’s proposed Libra token. The digital yuan is an attempt at preventing “the loss of money minting power in the digital era, and to ensure that currency issuance always serves overall national development and reform,” the PBoC deputy governor wrote.
And while Fan said that acceptance of the digital currency will be made mandatory in China, he noted that it would not immediately replace cash, as that would “create a huge waste,” without improving payment efficiency.
The article did not announce any official launch date for the digital yuan. According to one Japan-based China observer, however, the digital yuan’s launch is now “imminent,” with multiple private companies involved in nationwide pilot projects that are already underway.
The emphasis on the centralized properties of the new digital currency comes after several Chinese media outlets in articles earlier this year distanced the digital yuan from bitcoin (BTC), saying it “is not bitcoin or ethereum,” and will not lead to a rise of crypto in the Middle Kingdom.
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