The vice governor of the People's Bank of China wrote a rather revealing opinion piece about the central bank's plans to create a digital currency backed by the state.
Fan Yifei, deputy governor of the People's Bank of China (PBoC), revealed new information on Thursday about the cryptocurrency initiative in his country. Breaking with what had so far been the norm of official statements and press releases, the senior official conveyed new details in an opinion piece about China's plans to create a digital currency supported by the central bank (CBDC).
"It is a great waste of social resources to reinvent the wheel," Yifei wrote, in a statement that seemed to hint at the general ideology that drives China's CBDC effort.
So far, some have speculated that China, who has been investigating the associated monetary implications of such a company, could bet on the cryptocurrency, eliminating the issuance of the physical yuan and moving the national currency exclusively to a Blockchain.
That will not happen; In fact, the blockchain technology could move from the forefront of the Chinese CBDC conversation to a secondary consideration. According to Yifei, "to maintain the digital monetary properties of the central bank and achieve the objective of monetary policy and prudential management, the two-tier system of digital currency of China's central bank should be different from the decentralization of the distribution model of China." other tokens. "
Emphasizing how China's potential CBDC would be designed to retain the centralized monetary authority of the PBoC, Yifei described the functionality explored as having "controllable anonymity" whereby the PBoC would act as the exclusive third party to verify the transaction data. "
The digital currency of the central bank must adhere to the centralized delivery model. However, the model described here is different from traditional electronic payment tools.
The transfer of funds for electronic payment instruments must be made through an account, using a closely coupled account. The digital currency of the central bank should be based on weakly adapted accounts in the form of transactions so that the degree of dependence on an account is considerably reduced. In this way, it can have as much liquidity as cash and can be controlled anonymously.
Yifei went on to describe how the PBoC should exercise caution in implementing some of the most advanced attributes of the Blockchain technology, such as the executable distributed code contracts of the Ethereum block chain, and emphasized the importance of avoiding "other social and administrative functions". which are not usually associated with fiat money.
Yifei's comment provides an idea of how the CBDC effort in China is progressing and how officials think about this issue.
Apparently, China is trying to overcome the line that separates the future of digital money without moving too much of the status quo.