The vice-chairman of the China Center for International Economic Exchanges (CCIEE), Huang Qifan, has said that his country will launch the first-ever blockchain-based central digital currency. While he doesn’t believe in Facebook’s potential digital currency, Libra, he feels that such currencies are actually needed in the market as current payment methods appear to be outdated.
China’s Central Bank to Launch a Digital Currency
Huang 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 advantages of the technology. According to him, the People’s Bank of China has been studying digital currency electronic payment systems for five or six years, and will be “probably the first central bank to introduce digital currency in the world.”
According to Huang, government-issued digital currencies would allow sovereign states to reinforce monetary distribution rights. He also said that in order to improve security and convenience, China’s new digital currency should be linked to its national GDP, sovereign credit, gold, and fiscal revenue.
Initially, China’s central bank announced that it would launch 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, interest in the field has seen a notable spike, suggesting that the project might be expedited.
Outdated Current System
In his speech, Huang talked about current payment systems, noting 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SWIFT is an outdated, inefficient, and costly payment system.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.
Huang also touched on 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 obstacles having yet to be cleared.
Interestingly enough, the CEO of Facebook, Mark Zuckerberg, recently appeared before the U.S. Congress and stated that his country should adopt blockchain more, lest it risk other countries like China getting ahead.