As Libra’s White Paper Released, Blockchain Pilot Application Has Long Since Launched by China’s Central Bank
Various areas including economy, finance, technology politics are attracted after Libra’s white paper released apart from blockchain.
As the founder of Tencent, one of Internet giants in China thought Libra as a “sure thing”. Endorsed by Facebook, the social media giant contributes greatly to the rampancy of Libra. On the other side of the world, central bank of China, a stronger credit entity, has been studying blockchain and China’s own digital currency for many years. At last month’s exposition, the deputy director of the Digital Monetary Research Institute of the Central Bank disclosed that the application of blockchain had been launched.
As Libra is supported by Federal Reserve, China’s central bank has been studying digital money for more than four years. But compared with Libra’s high-profile launch, digital currency of China’s central bank launched in a cautious manner.
Known from the big data expo held in Guiyang, 2019, the Digital Monetary Research Institute of the Central Bank has already made some pilot applications. For example, the PBCTFP trade financing platform has been developed to serve for the trade and finance of Guangdong-Hong Kong-Macao Greater Bay Area.
Though there are many similarities between Facebook and China’s central bank in digital currency application, their considerations are totally different.
Digital currency released by China’s central bank aims to make up for the defects of banknotes. As the only function of paper money is valuation, so traditional monetary policy can only affect the supply and cost of private sector’s currency through aggregate adjustment. The central bank cannot determine the direction of traditional currency flows and whether currency politics are achieved.
These three defects directly affect the monetary policy-making of the central bank’s, so the central bank hopes to solve them through digital money.
PBCTFP, a blockchain platform launched by China’s central bank aims to trade and finance has achieved 17000 business with Over 4 billion yuan of volume. Its operation can provide experience for the use of blockchain-based digital currency.
Faced with the fact that Libra will launched next year, many people are worried about the status of the RMB. In fact, it is also a great concern to European financial institute. The EU actually has its own digital currency plan. Like China, it is also digital currency plan launched by central bank. After that, will the central bank’s digital currencies unite to build a new global financial system that is strong enough to resist the Federal Reserve-backed Libra?