The head of the People’s Bank of China’s (PBOC) digital currency research subsidiary, Changchun Mu, said China’s cryptocurrency will not need a currency basket to maintain a stable value.
Speaking to reporters at The China Finance Association Academic Annual Meeting and China Finance Forum Annual Meeting in Beijing Saturday, Mu said the digital yuan would be distinct from other forms of cryptocurrencies, including Libra.
“The [digital yuan] currency is not used for speculation. The RMB is used to spend, not for speculation. It does not have the characteristics of bitcoin speculation, nor does it require the currency basket assets to support the value of the currency like stable currency,” Mu said, as reported by Shanghai Securities News.
It’s unclear whether PBOC has any alternative mechanism in mind for pegging the value of the digital yuan to the traditional renminbi.
PBOC’s Digital Currency Research Institute has reportedly been developing the digital yuan, officially known as the Digital Currency Electronic Payment (DCEP), over the past five years. A former PBOC official said last month the bank envisions two main use cases for the digital yuan: to facilitate retail payments and create a new medium for cross-border payments.
Officials only began revealing details about the coin soon after Facebook unveiled Libra earlier this year. Also designed as a cheaper and faster remittances solution, Libra’s value is set to be pegged to a basket of major world currencies, including euro, sterling and U.S. dollar, supplied by Association members. China, which is reportedly concerned about private money initiatives taking market share, is expected to be the first major economy to launch a central bank digital currency (CBDC).
Talking about the digital yuan’s developmental roadmap, Mu said PBOC engineers had nearly finished. “At present, the digital currency DCEP of the People’s Bank of China has basically completed the top-level design, standard formulation, functional research and development, joint debugging and testing,” he said.
The bank would soon be at the point where it could start gradually issuing the digital yuan to Chinese citizens through its commercial partners, which include Tencent and Alibaba-backed Ant Financial, Mu added.
Although critics have expressed concern China could use its digital yuan to increase surveillance on its citizens, Mu has said the bank will guarantee cash-like levels of privacy for transactions while still being able to trace what it suspects to be illegal activity.