China will soon launch its digital currency to be tested within two cities in the country. The People’s Bank of China (PBOC) which is its Central Bank will oversee the launch of this product they have been working on since 2014. According to a news report from Caijing, the project will pioneer in the cities of Suzhou and Shenzhen where the natives will test the (DCEP) electronic currency.
The report further highlights that PBOC has engaged 7 state backed corporations to assist on an implementation strategy. Three of the selected companies are telecom giants while the remaining four are commercial banks based in China. Ideally, there is a horse race on which corporation will come up with the best approach to roll out and integrate the digital currency with the existing financial ecosystems. Some banks in this portfolio have opted to outsource digital wallet services from telecom’s while the rest chose to build their wallet applications from scratch.
Initially, the project will focus on key industries like medical care, commerce, education and transport. It will be rolled out in two phases with massive promotions for adoption expected to kick off in 2020. The DCEP digital currency research and development has been under a FinTech company mandated by the PBOC; news reports have speculated that the firm will continue to support this project to actualization.
Basically, financial institutions will obtain the digital currency by making RMB reserve deposits with the PBOC. The Chinese population will in turn register for digital wallets with the accepted commercial banks to leverage the DC/EP digital currency. Reports from insiders in Chinese corporations indicate that the East superpower accelerated the project in the wake of Facebook’s Libra announcement.
China Issues Blockchain-Based Bonds
Just recently, China issued bonds on a private blockchain as part of its digital ledger exploration in the fourth industrial revolution (4IR). The PBOC issued the $2.75 billion worth of bonds to small businesses; this move is a significant statement about the country’s intention to further pursue blockchain adoption.
Speculations by FinTech stakeholders point to blockchain-oriented credit letters although it is a far-fetched thought. Based on these developments, PBOC is determined to stay ahead of projects like Libra and state backed digital currencies expected to launch soon.