The Chinese central bank has revealed that it will soon launch its state-supported cryptocurrency after five years of research.
A senior official of the People's Bank of China said the cryptocurrency is "near the exit" at an event organized by the China Finance 40 Forum, according to separate reports from Reuters and Bloomberg, although it failed to provide a specific date for its inauguration.
Mu Changchun, deputy director of China's central bank, said the new currency would be based on a "two-tier" system that would allow both the PBC and financial institutions to issue the currency.
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China has traditionally been resistant to decentralized cryptocurrencies such as bitcoin, although the country is home to some of the largest cryptocurrency mining structures in the world.
But while China is rejecting the adoption of bitcoins, PBC has been studying the potential of its cryptocurrency since 2014.
Industry experts claim that other global economies are likely to be left behind if they do not develop their digital blockchain-based currency and continue to stifle the adoption of cryptocurrency.
"It is clear that China understands the opportunity cost of losing the growth of cryptocurrency," said Don Guo, CEO of Broctagon Fintech Group L & # 39; Independent.
"Digital currencies are entering the mainstream and international competition is heating up … China is well positioned to move forward in the game and take a leadership position in one of the main asset classes of the future. Although a certain level of regulation control is wise, other countries should consider China's leadership ".
Few details have been revealed about the Chinese cryptocurrency, although the new system could theoretically reduce the circulation costs of traditional paper currency, as well as accelerate and add security to digital transactions.
If the new currency is to be launched on a significant scale, it will have to be able to cope with huge volumes of transactions.
The new currency could also risk leaving large segments of the Chinese population of 1.4 billion, with only about half of the country possessing smartphones, which presumably will support the digital wallets needed to store and spend the cryptocurrency.
Patents registered by PBC reveal plans for a mobile wallet that would allow users to exchange yuan with cryptocurrency.
The systems described in the patents suggest that cryptocurrency could give the Chinese central bank much greater control over the money supply, as well as tracking all payments made through the network.