Forbes on August 27 reported that China plans to create a central bank-controlled digital currency of its own as soon as mid-November. While a newspaper under the control of the Chinese Communist Party denied that date, Forbes was told that the launch of the renminbi-denominated “DC/EP” cryptocurrency had been accelerated in light of Facebook’s planned Libra stablecoin. Regulators and elected officials around the globe have slammed the Libra plan as a potential threat to their own central bank-issued fiat currencies.
The digital currency to be issued by the People’s Bank of China (PBOC) will be backed one-to-one by the renminbi and be based on a two-tier system in which commercial banks would purchase the digital currency and distribute it into the market, according to a report released by Binance on August 28. Forbes was told that it would also be distributed through large “trusted” companies including tech giants Alibaba and Tencent.
Notably, Binance said that the PBOC has not yet committed to launching its sovereign digital currency on a blockchain. But the bank’s top officials did say at the China Finance 40 Forum that the new currency was “close.”
The exchange noted that its report was based on “key discussions in China by different public stakeholders and…various publicly available information, which has been released so far.” The central bank itself has not made any statement, Binance’s report added.
A key point it makes is that a Chinese virtual currency would enable the country to internationalize its renminbi. This would increase the currency’s influence around the globe in the midst of a punishing trade war with the U.S.
Global influence is a major goal of China’s leadership. The country is in the midst of a massive and long term plan to expand its influence with the Belt and Road campaign, building major infrastructure projects in some 130 countries, many of them developing nations.