China is planning to launch a digital currency in early 2020 that will make allowances for privacy, a senior central bank official said on Tuesday (Nov. 12).
The country is laying the groundwork to be the first nation to launch a digital currency and will balance privacy concerns with government oversight, Reuters reported.
The blueprint for the proposed digital currency seems to offer Beijing extraordinary supervision over the flow of money, giving regulators economic control that most central banks do not have.
“We know the demand from the general public is to keep anonymity by using paper money and coins … we will give those people who demand it anonymity in their transactions,” Mu Changchun, head of the People’s Bank of China’s digital currency research institute, said at the FinTech Festival in Singapore.
“But at the same time we will keep the balance between the ‘controllable anonymity’ and anti-money laundering, CTF [counter terrorist financing], and also tax issues, online gambling and any electronic criminal activities,” he added.
Similar to cryptocurrencies like bitcoin and Facebook’s proposed Libra, China’s Digital Currency Electronic Payment will be powered partially by blockchain technology and dispersed through digital wallets.
Jack Lee, the managing partner of HCM Capital, told CNBC that the proposed plan will allow the central bank to issue a digital currency to commercial banks and third-party payment networks by Alipay and WeChat Pay.
“So, they already have the system and the network ready. I think you will see it very soon, in the next maybe two to three months,” Lee told CNBC at the FinTech Festival on Monday (Nov 11).
Daniela Stoffel, Switzerland’s state secretary for international finance, said at the conference that China’s plans could be a catalyst to push worldwide regulators to determine digital currency policies.
“If the governments now realize that this is now really actually happening, and the questions and challenges that are implied in an e-currency are now real, I hope this will lend further momentum to decisions on a global basis,” Stoffel told CNBC.
Last month, China’s congress passed a cryptography law to promote crypto development and ensure sound cybersecurity.