China is Likely to Issue Central Bank Digital Currency First，Says Government Think Tank
An official from Chinese government think tank said China’s central bank is expected to issue its state-endorsed digital currency first, and he believed that Facebook’s Libra is doomed to fail.
According to local report, Huang Qifan, deputy director of the Congressional Financial and Economic Affairs Committee clarified the necessity of issuing national digital currency in Bund Summit in Shanghai.
“Central bank of China has been committed to DCEP (Digital Currency Electronic Payment) for more than five years, and I think China’s central bank is likely to be the world’s first to issue digital currency as the technology gets mature. “
Huang believes that payments and settlements between enterprises and countries need to be reshaped in the digital era. He thinks SWIFT (Society for Worldwide Interbank Financial Telecommunications), though as the world’s largest clearing system, has no future.
” SWIFT is an outdated, inefficient and expensive payment system. International telegraphic transfer usually takes 3-5 working days, and large-scale remittance usually requires paper documents, so it is difficult to deal with large-scale transactions effectively. At the same time, SWIFT monopoly huge profits as it charges one-thousandth of the settlement volume. “
Huang criticized SWIFT and chips CHIPS are gradually becoming the financial tools of the United States to exercise global hegemony, while blockchain has the advantages of transparency, security and credibility in terms of settlement.
While China central bank’s DCEP greatly reduces the dependence on the account, which is conducive to the circulation and internationalization of RMB, Huang added. DCEP can realize the real-time collection of data of currency creation, bookkeeping and flow, thus providing reference for the issuance of currency and the implementation of monetary policy.
In his speech, Huang repeated that DCEP leverages a two-layer operation system, which means the central bank will convert the digital currency to commercial banks or other operating institutions where the public could acquire DCEP, instead of single-layer structure where the central bank issues digital currency directly to the public. DCEP is not the digitization of the existing currency, but the alternative of M0.
While Chinese officials said DCEP is not a copy of Facebook’s Libra, the central bank compares its national stablecoin with Libra in multiple official documents.
DCEP still adheres to the centralized management mode though under the two-layer operation system. The natural attribute of crypto assets is decentralization, but the central bank’s digital currency must adhere to the centralized management mode.