China may be about to launch a fiat digital currency, but in all likelihood, it will only resemble a cryptocurrency on the surface.
And it probably won’t use a blockchain. While inspired to some degree by bitcoin and the like, the effort is explicitly framed as a strategy to beat them back.
The project was thrust into the spotlight last weekend when a senior official from the People’s Bank of China (PBoC) said at a closed-door conference that the country’s central bank digital currency (CBDC) is ready to launch.
In his speech, widely covered in the press, Changchun Mu, deputy director at the PBoC’s payments division, notably said:
“Since last year, the staff at the Digital Currency Research Lab have been working 996 to develop the system. We can say the CBDC is now ready to launch at one’s call.”
(996 is a phrase commonly used in the Chinese tech startup scene, referring to working from 9 a.m. to 9 p.m., six days a week.)
The CBDC aims to replace M0, meaning cash in circulation, via a two-tier system: the central bank issues the digital yuan only to commercial banks, who will further issue it to the public, Mu said. This approach is perhaps unsurprising since Yao Qian, the former chief of the research lab, hinted at this design in an op-ed published in CoinDesk in 2017.