China still in the process of research and testing its digital currency

The People Bank of China (PBoC) has released a statement on Nov.13 that reports of PBoC have issued the digital currency is false. Adds it has not authorized any asset trading platform or institution to distribute the legal-digital currency.

The official also asked the general public to not trust any institution or individual who distributes the digital currency as these are pyramid schemes and therefore, alert the fraudulent activity to the officials.

‘DCEP’ or Digital currency electronic payment is the official name of China’s state-backed digital yuan currency. The official also clarified that they are still in the process of research and testing the digital currency. Therefore, no timeline for its roll-out has been defined yet.

PBoC clarifies its goal:

China is researching its state-backed digital currency for 5 years and announced in Aug 2019 that they are ‘almost ready’. As the world’s central banks and financial service sector are closely watching the progress, in mainland China many view this development as a government tactic to gain oversight over their personal financial information.

To clarify its goal, the People Bank of China (PBoC) has started to openly communicate and share the details of its upcoming digital currency.

Recently in a conference in Singapore, Mu Changchun, head of the People’s Bank of China’s digital currency research institute said that the main purpose behind creating a new system is to mitigate the financial risk posed by existing electronic payment platforms which are highly dominated in China by just two private players – WeChat and AliPay. The new system would also provide financial inclusion to unbank, mostly in rural areas.

Read more: Why central bank are rushing to create the digital currency

PBoC official also clarified that the new system will keep a balance between users’ privacy and authorities’ (regulators) need for information. Meaning users who transact in digital currency will have their anonymity preserved, just as the case with cash money transactions. At the same time for regulators, it will provide just enough auditable information to combat money laundering, terrorist financing, tax evasion, online gambling transactions and financing criminal activities.

Last week, PBoC also clarified holders of digital yuan currency would not receive any interest payment, meaning no implication for inflation or monitory policy.