One of the biggest stories to come out of cryptocurrency in 2019 was the confirmation that China was working on it to national just talk currency. This announcement marked China’s official foray into the world of cryptocurrency as they had previously been hostile to it and also had great implications for the global economy. First of all, with a population of over 1 billion people, China’s digital token is poised to be one of the most used in the world and could also set off a ripple effect that will lead to many more countries around the globe establishing their own digital currencies to the point that they may become the norm.
Naturally, comparisons have been drawn between the upcoming digital token and other prominent cryptocurrencies such as bitcoin. However, according to People’s Bank of China’s (PBoC) deputy director Mu Changchun, the upcoming token will not be like traditional stablecoins or bitcoin.
A December 22, 2018 report from the South China Morning Post states that the head of the digital currency research institute at the PBoC has explained a few details about the upcoming digital token. For example, the token will be a digital version of China’s fiat currency and there will be no room to speculate on its value and will also not have any backing the way stablecoins do.
“The currency is not for speculation. It is different to bitcoin or stable tokens, which can be used for speculation or require the support of a basket of currencies,” he said.
The currency will also operate a two-tier system in which the People’s Bank of China sits at the top while commercial banks will operate in the lower tier of the system. The government has also dispelled rumors that they are launching a war on cash and have stated that this digital token will instead complement the already existing fiat currency. Over a 2 year period, an initiative that will ban large cash transactions will be implemented in certain places in China such as Hebei Province, Zhejiang Province, and Shenzhen City.