China Planning to Launch its Government-Backed Digital Currency Before Facebook’s Libra

  • Chinese CBDC and Libra’s organization structure is quite similar
  • PBOC expediting the process

The central bank digital currency (CBDC) of China may come out sooner than expected as the “time is almost ripe,” reported China Daily on Tuesday.

Last week, we reported Mu Changchun, deputy director of the People's Bank of China’s payments department saying that the government-backed digital currency is ready to be launched after five years of research.

Now, multiple approaches are being tested for its launch, said experts and officials who are expecting more participation from institutions in creating the CBDC.

“The time is almost ripe,” wrote the daily newspaper, which is owned by the Publicity Department of the Communist Party of China.

Chinese CBDC and Libra’s Organization Structure is Quite Similar

It also reads that Facebook coming up with its digital currency “Libra” may drive Chinese regulators to reconsider the model of CBDC. Moreover, it may come out earlier than the launch of Libra.

Interestingly, PBOC’s original plan might be influenced by Libra, said Yang Dong, director of the Research Center of Finance Technology and Cyber Security at the Renmin University of China.

To some extent, Chinese CBDC and Libra’s organization structure is also “quite similar” said Mu.

“Further testing is needed before officially launching the Chinese CBDC, gaining inspiration from the Libra,” said Yang.

He further talked about private and state-owned companies joining with the central bank but refused to disclose the names of the companies involved in the pilots.

PBOC Expediting the Process

Plans for the CBDC are varied that will have “lots of positive impacts” but also facing difficulties such as exchange rate policy and international coordination in monetary, said Shao Fujun, chairman of China UnionPay and former PBOC official.

“Where we are now is just like in a horse race, when several designated institutions are taking different technical routes for developing the digital currency and electronic payment. The winner will be the one who has the best approach, accepted by the public and the market. So that is a process of market competition,” Mu said.

Planned for the second half of this year, the research of China’s legal digital tender and monitoring the trends of virtual currency development overseas and at home would be expedited, said the PBOC.

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