Chinese Central Bank Will Be The First to Launch A National Digital Currency Dubbed DCEP

Over the last few months, Asia’s economic giant China has accelerated its plans of launching a central bank digital currency. Considering the latest developments, a former Congressional official said that China’s CBDC plans are set to materialize soon.

Established in 2017, the Digital Currency Research Institute is currently working on China’s national digital currency Digital Currency Electronic Payment (DCEP). 

Huang Qifan, vice chairman of China Center for International Economic Exchanges (CCIEE) is confident that China’s central bank - PBoC - will be the first to launch a central bank digital currency.

As per the local Chinese media report, Qifan’s remarks came while speaking at the Shanghai Bund Summit wherein he explained the impact a national digital currency can have on global financial market.

“I think the technology is getting more mature, and it is highly likely that China’s central bank will be the first to issue a national digital currency,” he said.

Another publication Pandaily mentioned Qifan’s dissatisfaction with the existing SWIFT and CHIPS payments system. He said: “SWIFT is an outdated, inefficient and costly payment system. Since the establishment of SWIFT 46 years ago, the technology has been updated slowly and the efficiency has been relatively low. International wire transfers usually take 3-5 business days to arrive”.

Qifan further added: “Large remittances usually require paper documents, which presents additional difficulty for processing large-scale transactions effectively. At the same time, SWIFT usually charges a fee of one ten-thousandth of the settlement amount, and has obtained huge profits by virtue of the monopoly platform.”

Although there’s no specific time stated for the release of China’s CBDC, the authorities are working on its actively. Qifan’s statement comes just a day after Chinese president Xi Jinping asked the country to accelerate its blockchain adoption.

Taking a dig at Facebook’s Libra, Qifan also mentioned that the job of issuing a stablecoin should be best left to central banks and governments. He said: “I personally don’t believe Libra will succeed. Some companies attempt to challenge sovereign currency by issuing bitcoin or Libra. The decentralized blockchain-based currencies are not supported by sovereign credit and hard to become real wealth.”

Last month in September, PBoC appointed Changchun Mu as the director of Payments System at the Digital Currency Research Institute to accelerate the development of DCEP. Qifan said that the DCEP could be possibly pegged to country’s GDP, gold reserve, fiscal income etc.