It is widely reported that China is close to launching the Digital Yuan in their Renminbi internationalization drive and to minimize their dependence on the US Dollar.
Now, according to recent reports, it is said that the People’s Bank of China (PBOC) issued coin, which will in no way resemble Bitcoin, will have a superior throughput, processing 220,000 per second according to Yang Wang, a research fellow at the Fintech Institute of Renmin University of China.
This lightning-fast speed is more than 5X the speed of PayPal and 220X that of Facebook’s Libra. It will be incomparable to Bitcoin, which has a peak transfer rate of around 7 TPS.
China’s Grip on the Financial System
The PBOC has been actively developing the currency over the last five years.
However, what is curious about this development and China’s inclination towards blockchain, and its resistance towards Bitcoin-a preferred censorship resistant coin that together with other digital assets cannot be traded within their jurisdiction, is the leadership’s objective of further tightening its grip on the Chinese financial system.
The PBOC, upon finalization, will launch the currency via a mobile wallet. Citizens can either buy the coin using cash or use the platform to settle.
Countering Facebook’s Libra
The digital currency, dubbed DC/EP, is further said to reduce the USD hegemony and address the widespread complaints that the world’s leading reserve currency has been weaponized to the great distress of other sovereign economies.
As Beijing prepares for an “all-out currency” war, Cao Yin, a blockchain veteran, told Global Times said defenders of currencies will be diversified and include private entities:
“A war of crypto tokens will break out next year, and ‘soldiers’ will not only include central banks and governments but also multinationals like Facebook and large cross-border financial institutions. Competition will be beyond imagination.”
The PBOC accelerated their Digital Yuan development following Facebook’s grand ambitions of launching their private currency, the Libra. Libra is envisioned as a global currency that will significantly lower transfer of value across countries and will specifically serve the underserved, cutting out banks and will be a stablecoin backed by several fiat currencies.