The newly appointed Chinese head of digital currency claims that the digital yuan will have some comparable traits to Facebook’s Libra currency and the public will be able to use it within various Chinese payment platforms namely WeChat as well as Alipay CoinDesk reports.
Mu Changchun, who is the current deputy director of Chinese Central Bank in charge of the payment department explained that the release of the digital coin will allow China to preserve its sovereignty in foreign exchange amid the explosion of digital currencies in the world.
He said that the coin will help the country prepare in advance on what might happen in the future due to digital currencies.
Mu also sought to clear any fears related to the safety of the digital coin saying that they will be offered by the central bank and individuals will be able to utilize them without the use of internet since they will be available in WeChat, Alipay as well as Tencent.
Mu also explained some of the technical capabilities of digital yuan that cannot be found in Libra. He stated that people will not need to own bank accounts since the new currency will not be controlled by the conventional banking system. Mu also said that individuals using the digital currency will be able to maintain their privacy.
Shanghai Securities News quotes Mu explaining that the new digital coin will be issued using the commercial financial institutions just as fiat currency. The financial institutions will be required to open accounts with the Chinese central bank and purchase the digital coin at 100 percent value. From there, the public will need to open digital wallets to store and withdraw the digital currency just like the way fiat money system operates.
The explanation that the main aim of issuing the digital coin was to plan ahead as well as preserve the country’s financial sovereignty can be a hint that the announcement by Facebook that it was releasing Libra could have been the reason for the rapid interest in digital currency for a country that has always protected its financial system.
CoinDesk reports that the former central bank governor Zhou Xiaochuan had in July explained that Libra is set to change the way global payment system works.