The vice-chairman of China Center for International Economic Exchanges (CCIEE), Huang Qifan, has said that they will be launching the first-ever blockchain-based central digital currency. While he doesn’t believe in Facebook’s potential digital currency Libra, he feels that such currency is actually needed in the market as the current payment methods appear to be outdated.
China’s Central Bank To Launch a Digital Currency
Qifan spoke at the Inaugural Bund Financial Summit of 2019, which is currently taking place in Shanghai. Blockchain was one of the discussed topics and he pointed out the improvements in the technology. As per his words, the People’s Bank of China has been studying digital currency electronic payment systems for five or six years and is “probably the first central bank to introduce digital currency in the world.”
As per his words, government-issued digital currencies would allow the sovereign states to reinforce the monetary distribution rights. He also said that in order to improve security and convenience, the new digital currency should be linked to the national GDP, sovereign credit, gold, and fiscal revenue.
Initially, China’s central bank announced that it will be launching a government-backed cryptocurrency this November to be used by major corporations within the country. With the President of the country, Xi Jinping, saying that China should adopt more blockchain-based technologies, the interest for the field has seen a notable spike and the project might be expedited.
Outdated Current System
In his speech, Qifan reportedly talked about the current systems used for payment transactions and that they might not be relevant anymore:
SWIFT is an outdated, inefficient, and costly payment system. Since the establishment of SWIFT 46 years ago, the technology has been updated slowly and the efficiency has been relatively low. International wire transfers usually take 3-5 business days to arrive. Large remittances usually require paper documents, which presents an additional difficulty for processing large-scale transactions effectively. At the same time, SWIFT usually charges a fee of one ten-thousandth of the settlement amount and has obtained huge profits by virtue of the monopoly platform.
Qifan also briefly touched the matter of Libra. Facebook’s potential digital currency has been facing regulatory issues and backlash ever since it was announced earlier this year. The vice-chairman expressed his disbelief that Libra will actually be a success with so many risks coming from the project, yet to be cleared.
Interestingly enough, the CEO of Facebook, Mark Zuckerberg, appeared before the U.S. Congress and said that they should adopt blockchain more, otherwise risk having other countries like China get ahead.