Digital version of yuan mooted for November
China’s central bank is reported to be on the brink of issuing its own cryptocurrency, spurring strong market interest as one of the most important financial institutions in the world prepares to enter the digital age.
Researchers at the People’s Bank of China have been working in secret on the project for over a year and are now believed to be close to launch of a digital version of the nation’s currency, the yuan.
Launch date November 11
While the launch has been hailed as a major new cryptocurrency in some quarters it is expected that the Chinese-sanctioned currency, or CBDC, would not make use of a public ledger and would provide the Chinese government with unfettered overview of all transactions.
“A CBDC could have several advantages from a central bank’s perspective. One is winning back more direct control over money supply, to use as a monetary policy lever. In the fractional reserve banking system, banks make the money, and central banks control its supply only indirectly, through adjusting banks’ incentives. In a CBDC system, the central bank could bypass banks and influence consumers directly,” Vili Lehdonvirta, a senior research fellow at the University of Oxford’s Internet Institute, said in comments to Quartz.
The cryptocurrency could go live as soon as November 11, coinciding with Singles’ Day, a popular Chinese shopping holiday, according to news agency Forbes.
AliPay backs XRP
Elsewhere in China, Chinese payment giant AliPay has also broached the crypto field, signing a partnership with US developer Ripple for the use of its XRP cryptocurrency token in its operations.
Presently valued at $150 billion, AliPay is currently the largest payment networks in the world and Brad Garlinghouse, CEO of Ripple, cites constructive conversations with the Chinese firm and the firm’s “zeal to make a move into the US”
AliPay was already testing XRP for deployment and commentators expect any future tie up with U.S. cryptocurrency developer Ripple would boost the value of its titular XRP token.
The implications for conflict with the new digital yuan remain to be seen but AliPay has already registered the URL – alipay.ripple.com