China accelerates the development of its digital currency in a secret environment | CryptoNews

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The People's Bank of China (PBoC) is working at full speed on its development plans for a central bank digital currency (CBDC), hoping to compete with the cryptocurrency Libra, from Facebook, in the market.

A team belonging to the Central Bank Digital Currency Research Laboratory is dedicated to the development of the system in a closed door environment, far from the headquarters of the PBoC, in the center of Beijing, according to a person close to the bank. The team has been working in this separate location, since the beginning of this summer, in order to fully concentrate on the project, the spokesperson added.

The job accelerated when Facebook unveiled its vision of Libra last June, a global cryptocurrency to facilitate payments, the source added. The announcement of the Facebook cryptocurrency also shook governments around the world, stimulating the convening of hearings in Congress in the United States, in addition to bold new ideas from central bankers, as happened with the governor of the Bank of England Mark Carney

However, much of the PBoC project remains secret, so there are conflicting reports on the calendar and the degree of participation of the main Chinese companies.

When will the launch be?

According to a report of this September 4, offered by the state media China Daily, the "closed circuit tests" for the digital currency have already begun. The purpose is to simulate payment scenarios in which "some commercial and non-governmental institutions" would be involved. If things go well, the project could be launched before Libra, which points to the first half of 2020 for its debut, China Daily said in a previous report.

Forbes, Forbes said last week that four large state-owned commercial banks in China, as well as financial technology giants Alibaba, Tencent, Union Pay and an unidentified company, will be the first group of organizations to receive the CBDC . It could be launched as early as November, Forbes said.

The four commercial banking giants that will be involved in the project are the Bank of China, the Construction Bank of China, the Agricultural Bank of China and the Industrial and Commercial Bank of China, one of the world's largest banks by assets totals However, hours after the Forbes report was published, the Chinese publications Tencent News and Sina they said that the timeline and scope of the eight institutions were "inaccurate speculations", citing statements from people close to the Central Bank.

However, a second source who is familiar with the efforts of the CBDC of the PBoC said that the organizations mentioned in the Forbes report yes they have participated in the development of the initiative, although the source did not say if all or only some of the institutions mentioned will receive the digital yuan, backed by the State, at its launch.

At the same time, a third person who works for one of the aforementioned institutions said that such work is ongoing within his organization, but it is not clear what the actual contribution of that company is in the plan, since the details are confidential. On this issue, these organizations did not respond to the request for comments from CoinDesk.

Regional deployment

When a central bank digital currency is launched, the agency cannot implement the currency throughout the country on the first day. In that regard, the Chinese state publication, Global Times, last week cited industry sources familiar with the matter to point out that The system could be launched first in Shenzhen, to test the ground. There, local companies, including Tencent and state financial institutions, are investigating technical frameworks to support the development of the CBDC.

The PBoC Digital Currency Research Laboratory previously created an entity called the Shenzhen Fintech Research Institute, together with the local government and the Shenzhen financial regulator. The objective is to carry out projects related to digital and financial technology.

The institute has also had a great recruitment activity, publishing job advertisements in search of several technical experts, including blockchain architects and cryptocurrency specialists, required to establish themselves in Shenzhen and Beijing. Likewise, the PBoC Digital Currency Research Laboratory has submitted more than 50 patent applications to detail the potential design of the state-backed digital yuan.

As previously reported, according to these patent applications, the CBDC provided by the Chinese government It could only resemble a cryptocurrency at the surface level, in relation to the peer-to-peer transaction system, but will eliminate most of the features of anonymity and decentralization of crypto assets.


Translated version of Article of Wolfie zhao, published in Coindesk.



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