During the last meeting of China Finance 40 Group, representatives of the Central Bank of China announced the imminent launch of the national digital currency (CBDC).
Mu Changchun, deputy head of the Payment and Settlement Division of the People’s Bank of China, said the development team had completed work on the prototype of the token and the Digital Money Research Group had fully adopted the blockchain architecture. As it became known, the digital currency of China will not fully rely on the architecture of the blockchain, since this will not allow the currency to achieve the throughput required for retail use.
According to Changchun, the currency has been in the research and development phase since 2014. Now the People’s Bank of China will focus on introducing and distributing the new currency. It is assumed that the central bank can use existing tools to force commercial banks to gradually introduce a token into circulation and improve the adoption of digital currency.
It is noteworthy that the digital currency of the People’s Bank of China involves the use of a two-level system:
- the base layer is the central bank,
- the second level is commercial banks.
The representative of the NBK added that such an architecture is most suitable for the Chinese economy. CBDC is designed to reduce various risks in the country’s financial system, increasing its effectiveness.
However, Mu Changchun noted that the new currency still faces many problems, the main ones being the lack of clear operational processes and a detailed regulatory framework in different countries.