The People's Bank of China has stated that time is drawing near for it to release its own cryptocurrency. "The bank's researchers have been working intensively since last year to develop systems, and the cryptocurrency is close to being out", stated Mu Changchun, deputy director of the PBOC's payments department.
The intention behind the issuing a large scale cryptocurrency is to replace cash in circulation, in a bid to clamp down on fraud and criminal activities. The digital currency is said to support the yuan (the currency unit of renminbi), which will continue to circulate as the cryptocurrency is implemented. The PBOC has taken measures to mitigate any risks in introducing a cryptocurrency, in order to prevent any foreign exchange risks.
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Unlike currently active blockchain systems which remain decentralised, the new cryptocurrency is intended to support Beijing's financial system. The cryptocurrency system will be implemented by allowing Chinese citizens to use their digital wallet to swap yuan for the cryptocurrency, allowing the PBOC to keep track of the money trail, thus putting an end to money laundering and other financial crimes. In August 2019, The cryptocurrency is due to be released to the public and will change the face of banking, globally.
Last week Monday, the Chinese yuan tumbled in a historic RMB7.0 to the dollar, causing an instantaneous global crisis. Markets, thrown into a frenzy, over the possibility of a currency war, an endless loop of depreciation, havoc amongst potential investors, causing a potentially volatile spiral in trade and growth.
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However, panic has been proven as unnecessary as the (PCOB) calmed fears by stating that the yuan will stabilise in value and that China has no intentions of using currency manipulation as a weapon of war. For the past ten years, China has sought to move the currency away from dependency on the market, by creating a worldwide economic model, independent of reliance on foreign imports. Investors seeking security from the threat from market depreciation are turning to cryptocurrencies such as Bitcoin.
By seeking digital alternatives for investment amid potential threats or US-instigated global paranoia, Bitcoin saw an unprecedented increase after the yuan tumbled last week. Yet despite this increase, only two years ago, China ordered a close-down of all local Chinese currency exchanges, causing an immediate decline of 6% in Bitcoin trading. Current Chinese cryptocurrencies such as NEO, Qtum, and VeChain, have all contributed significantly to the development of block-chain technology, and the new cryptocurrency is set to change the financial market dramatically.