BEIJING – China plans to launch the world’s first sovereign cryptocurrency, which would help in the fight against various economic problems.
One of the factors that led Beijing to develop its cryptocurrency was its concern over the development of cryptocurrencies such as Facebook’s Libra and bitcoin. With that, China would achieve what the monetary authorities have been trying for a long time.
A survey by the Bank for International Payments (BIS) in 2019 found that approximately 70% of the world’s monetary authorities were considering launching their own versions of digital currencies.
The head of the People’s Bank of China’s digital currency research institute, Mu Changchun, noted that the electronic yuan would be distributed to commercial banks and online payment companies such as Tencent and Ant Financial.
The technology would provide unprecedented capacity to Chinese monetary authorities, which could monetize the flow of spending online. In this way, the control agencies will have a powerful and very useful tool in the fight against fraud, tax evasion and money laundering.
Using digital currencies will help make interbank agreements and financial transactions more efficient and secure.
The entry of the digital yuan into China could contribute to the Asian country’s efforts to settle its $341 billion toxic debt.
Meanwhile, the Facebook Libra digital currency, created by Facebook and twenty different companies, is due to be launched in 2020. Large multinationals, such as Mastercard and Visa, are some of the payment means that have announced they are participating in the early phase of the project.
EU finance ministers have decided not to allow Facebook Libra, or any digital currency anchored to conventional physical means or reserves , to operate within the bloc’s borders, according to Reuters.
According to Valdis Dombrovskis, European Commissioner for Finance, the necessary preparations have already begun.
The future of Facebook’s crypto currency became uncertain with Mastercard and Visa’s departure from the project in October, but the rest of the participants announced they are determined to continue.