China leads the CBDC race, but has no plans to enter the global market yet
As talk of creating Central Bank digital currencies becomes more relevant, a number of key banks are eager to take the next steps, so they are closely monitoring the middle Kingdom and its progress.
Is it a matter of time when the digital yuan reaches the global level?
Despite the ban on all cryptocurrencies, China has adopted blockchain technology and has gone so far as to work on creating its own digital currency of the Central Bank. Well, at least it has been testing it for a long time in full swing. China is certainly leading the way in launching such a blockchain token, but their creation will be different from anything expected from cryptocurrencies and Central banks.
The CBDC introduced by the PRC has of course been described as completely different from Bitcoin or any other such volatile and decentralized token, but it also looks like Beijing will not follow the global trend towards CBDC.
Despite the fact that China is a world leader in testing its own digital sovereign currency, the NBK clearly does not participate in the discussions of international groups. The new digital yuan has not yet been officially unveiled, but it continues to be tested in ongoing pilot programs across the country.
One of the reasons why Central banks pay attention to digital currencies is the globalization of the world and the transition to more digital payments. This also involves international cooperation.
The working group was formed by The Bank of Canada, England, Japan, the European Central Bank, the Swedish Riksbank, the Swiss national Bank and the US Federal reserve, as well as the Bank for international settlements (BIS). it is believed that they all have a common motivation – to avoid unintended obstacles to the transfer of sovereign currencies in their electronic forms.
However, as reported by the South China Morning Post, China is not involved in achieving this common goal.
“Creating a group seemed reasonable, because we have a common platform of similar thinking. We face similar conditions, we have similar financial sector structures, and some of us have worked together,” said John Cunliffe, Deputy Governor of the Central Bank of England, during an online news conference.
“The Central Bank’s digital currency can become an important tool for Central banks to help them achieve public policy goals,” he added.
To remain independent
“The Chinese government is likely to consider cross – border digital yuan transactions because the US-China trade war has pushed Beijing to develop its own payment system for global trade and investment, accelerating its efforts to internationalize the yuan, and thereby reducing China’s dependence on the us dollar payment system,” said sky Guo, founder and CEO of new York-based blockchain company Cypherium.
“There are differences with the digital yuan because China wants to develop its own system independent of the current dollar – dominated payment system,” Guo said. “It should have its own path of development and its own financial system.”