The People’s Bank of China announced a month ago that it is very close to releasing a digital currency of its own. The Bank says the release of the coin is intended to protect the sovereignty of China’s foreign exchange. However, at least one financial service that advises on cryptocurrency in America believes the move will result in the Yuan being used by people across the globe.
The central bank of China will use a two-tier system to launch the digital currency and will allow commercial banks in the country, as well as, the PBOC to issue the currency.
Jeffrey Allaire is the CEO of Circle. Allaire says the digital currency release will serve several purposes and maintains one result will be the global use of the Yuan. Allaire elaborated on his thought by saying the coin release provides a mechanism for the Yuan to be used for regular transactions across the globe on a day to day basis. He characterizes the move as a foundation that will facilitate the Yuan’s internationalization.
It has been a goal of the Chinese government to encourage more use of Yuan across the globe in recent years.
The International Monetary Fund reports that more than half the foreign exchanges in the world use the United States dollar. Additionally, approximately 40 percent of the world’s debt is counted in dollars. This makes the dollar the reserve currency of the planet.
Mu Changchun works with the payments department of the PBOC as its deputy director. Changchun says the new currency is similar to the one that is planned by Facebook. He says the currency will provide consumers with the same safety standards as paper notes issued by the central bank and will be available for use in a variety of ways both on and offline.
The digital currency Facebook plans to offer, Libra, will be backed by stable government money. This differs from Bitcoin and the other cryptocurrencies in circulation which do not offer protection from government money and are highly speculative.
Facebook says all of its users will be able to store money on their phone free of charge and will be able to conveniently send and receive Libra from anywhere on the planet.
Allaire adds that the digital currency that will be used by China is designed to allow the money supply to be easily tracked by government authorities and combat issues like money laundering and corruption.