China is close to releasing its own cryptocurrency according to the deputy director of the People’s Bank of China’s (PBOC) payments department, Mu Changchun. The country was believed to have been working at building a cryptocurrency for a few years now. While the release of the cryptocurrency was described as “close”, no specific time frame was provided.
One of the interesting aspects of China developing a national cryptocurrency is that it will be able to better connect those in rural areas who are unbanked, all that’s required is a mobile wallet. According to patents registered with the PBOC, consumers and businesses will download the digital wallet and swap their yuan for the cryptocurrency which will be used to make and receive payments.
By adopting a cryptocurrency, China expects to be able to track every time money is transferred, there could also be transaction caps in place to limit large transfers of money by individuals.
According to Mu, who was speaking at an event held by China Finance 40 Forum, the plan for the cryptocurrency is to replace cash in circulation. He said this would have the added effect of supporting the yuan’s circulation and internationalisation. The announcement from the PBOC comes just a month after it said that it was concerned about the U.S. dollar’s influence of Facebook’s planned Libra cryptocurrency.
It’ll be interesting to see how things go in China, if it’s a success we could see other countries ramp up their efforts and deploying national cryptocurrencies. The main appeal with trackable cryptocurrencies for governments is that they can watch where money goes and more easily tackle fraud to ensure they get all of their owed taxes.