February 20, 2024

Opinion: China's Central Bank to be the first to issue sovereign digital currency in the world

The People's Bank of China will become the world's first central bank to issue a viable digital currency, inwhile the Libra project from Facebook will fail. This opinion was expressed by Vice Chairman of the China Center for International Economic Exchanges (CCIEE) Huang Qifan, reports Pandaily.

Speaking at the First Financial Summit in Shanghai, Huang Qifan emphasized that in the current digital age, the methods of payments between enterprises and countries should change.

He also drew attention to the fact thatRMB international liquidity is heavily dependent on SWIFT (Society for Worldwide Interbank Financial Communication Channels) and CHIPS (Interbank Electronic Clearing Settlement Systems). Both instruments are used by the United States to provide global financial hegemony, he added.

«SWIFT is outdated, ineffective andexpensive payment system. Since its inception 46 years ago, its technology has seen few updates and its efficiency is relatively low. International bank transfer usually takes 3-5 business days. Large money transfers typically require paper documents, which creates additional challenges for efficient processing of large-scale transactions».Qifan said.

This does not prevent SWIFT from making huge profits due to its monopoly position in the market, the vice president of the analytical center recalled.

He also said that he was not optimistic about the Libra project, noting that, as in the case of bitcoin, this is an attempt by some companies to challenge sovereign currencies.

«A similar decentralized currency,based on blockchain, is beyond sovereign money. The issuance base cannot be guaranteed, the value of the currency cannot be stabilized, and it is difficult to truly generate public wealth. I don't believe Libra will succeed»- says Qifan.

In his opinion, the solution is to issuesovereign digital currency by central banks. This will allow them not only to increase the convenience and security of payments, but also to formulate new rules that will provide an opportunity to link digital currencies to sovereign loans, national GDP, budget revenues and gold.

Qifan recalled that the People's Bank of China is exploring the possibility of issuing digital currency over the past 5-6 years.

«I think the technology is quite mature. The NBK, apparently, will be the first in the world from the Central Bank to introduce a digital currency»,- he said.

Recall that in August, the representative of the NBK said that after 5 years of development, the digital currency of the central bank is ready. However, a representative of the institution later denied media reports about its imminent launch.