China completes first test runs on establishment of new sovereign digital currency
A few days ago the People’s Bank of China completed preliminary testing of a new digital currency to run concordant with the Renminbi.
With most of China already functioning on a digital monetary system, creation of a digital currency that would run on the Ethereum of Blockchain platforms is the next step for the world’s largest financial center, especially since recent studies show that the Chinese people would¬†rather go cashless¬†and use mobile pay options over cash and credit.
The People’s Bank of China, China’s central bank, has completed trial runs on the algorithms needed for digital currency supply, taking it a step closer to addressing the technological challenges associated with digital currencies, according to a top official associated with the project.
Yao Qian, director-general of the Institute of Digital Money at the PBOC, said China’s central bank has successfully designed a prototype that can regulate the supply of its future digital fiat currency.
The successful simulation of money supply paves the way for the central bank to become the future sole regulator and policymaker governing the value of digital fiat currency, said Yao.
Digital fiat currencies are the digital forms of a sovereign currency that is backed by the central bank.
Unlike Bitcoin or other digital money issued by the private sector, the digital fiat currency has the same legal status as the Chinese yuan, the only fiat currency issued by the People’s Bank of China.
There is no timetable for the introduction of the currency, but once introduced, China is likely to become the first country that would deploy a digital fiat currency. –¬†China Daily
China is running full steam ahead towards the creation of a digital monetary system that will run all along the Silk Road and facilitate the economy’s growing dominance in online retail.
With Russia also moving ahead with a sovereign cryptocurrency it appears that the West is lagging behind on using the potential of blockchain technology outside of central banks and interbank settlement.¬† And perhaps the primary reasons for this are tied to the lobbying efforts of companies such as Visa and Mastercard, since they represent private multinational corporations while China’s Union Pay is a state run digital monetary platform.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.