The People’s Bank of China (PBoC) is “close" to issuing its own cryptocurrency, according to a senior official.
The bank’s researchers have been working intensively since last year to develop systems, and the cryptocurrency is “close to being out," Mu Changchun, deputy director of the PBoC’s payments department, said at an event held by China Finance 40 Forum over the weekend in Yichun, Heilongjiang. He didn’t give specifics on the timing.
Mu repeated the PBoC’s intention that the digital currency would replace M0, or cash in circulation, rather than M2, which would generate credit and impact monetary policy. The digital currency would also support the yuan’s circulation and internationalization, he said. The remarks signal the PBoC is inching toward formally introducing a digital currency of its own after five years of research.
Facebook Inc.’s push to create cryptocurrency Libra has caused concerns among global central banks, including the PBoC, which said the digital asset must be put under central bank oversight to prevent potential foreign exchange risks and protect the authority of monetary policy. “Libra must be seen as a foreign currency and be put under China’s framework of forex management," Sun Tianqi, an official from China’s State Administration of Foreign Exchange, said.
Unlike decentralized blockchain-based offerings, the PBoC’s currency is intended to give Beijing more control over its financial system.
According to patents registered by the central bank, consumers and businesses would download a mobile wallet and swap their yuan for the digital money, which they could use to make and receive payments. Crucially, the PBoC could also track every time money changes hands.