The world could be seeing a Central Bank-backed Digital Currency (CBDC) sooner than expected, as China is considering accelerating the development of its state-run digital currency with hopes that it would help counter potential threats from the United States on the Chinese economy.
Cao Yin, a Beijing-based blockchain industry insider, told local Chinese media, the Global Times today, that the nation’s digital yuan may also be launched early to facilitate the implementation of a nationwide post-COVID-19 stimulus.
Currently, the U.S.-China relation is on the brink of collapse as both nations are at loggerhead over the spread of the coronavirus (COVID-19) pandemic. Since the outbreak of the virus, the countries have embarked on a war of words, which led to the U.S. adding 33 Chinese companies to its Entity List, a trade blacklist.
China’s foreign ministry had since expressed dissatisfaction with the move while defending the government’s crackdown in Xinjiang. Although Chinese financial institutions were not affected by the U.S. sanctions, Yin believes that the U.S. still poses widespread threats to all industries in China, which could affect the nation’s currency, Chinese Yuan, in international settlement.
“In this regard, China’s state-run digital currency may be rolled out sooner than expected to counter a possible U.S. block,” Yin said.
China’s CBDC launch is close
China accelerated efforts to launch its CBDC moments after Facebook announced the Libra project, a stablecoin that holds its value against a basket of fiat currencies.
Since then, the country has not stopped working round the clock to quickly unveil its CBDC that has been in development for over five years.
The roll-out of China’s official digital currency seems very close, as China’s central bank, the People’s Bank of China, commenced the pilot test of its Digital Yuan across four major cities, including Shenzhen, Suzhou, Chengdu, and Xiong’an, a district of Beijing.
Yi Gang, governor of the People’s Bank of China (PBC), said that the pilot test of its CBDC is part of “routine work” for research and development while adding that no date has been chosen for an official launch.
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