The People’s Bank of China (PBoC) is planning to launch its much anticipated central bank-backed digital currency (CBDC) in two cities – Shenzhen and Suzhou – initially for testing purposes.
Reported by local financial news agency Caijing, the central bank has partnered with seven state-owned companies, among which four are commercial banks and three telecom giants. The report, however, did not disclose the name of the partner companies.
Earlier Forbes revealed that the first batch of the digital currency would be distributed to China Construction Bank, the Industrial and Commercial Bank of China, the Bank of China, the Agricultural Bank of China, and the Chinese banking association Union Pay, along with two tech giants – Alibaba and Tencent.
Dubbed digital currency electronic payment (DC/EP), the PBoC is designing the digital currency in a centralized way to control is distribution. It is also believed to make the usage of yuan more prominent on an international level.
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The report also outlined that the central bank will first launch the Shenzhen pilot program, which will be conducted in two phases. The regulator will widely promote the digital currency in the city next year after a controlled trial by the end of this year.
Competiton to Facebook’s Libra
The PBoC reportedly initiated the development process in 2014. However, it suddenly accelerated its pace in mid-2019 after the announcement of Facebook’s Libra.
“Previously, [the central bank] was in no hurry doing this. Recently, all [of] a sudden, they accelerated,” several sources told the local publication.
Along with China, central banks of other countries are also planning to launch a digital currency. Most recently, the Bank of France’s governor announced the bank’s plan to launch a digital currency by next year.