The Chinese central bank has a new digital currency chief who says its upcoming digital yuan has features not offered by Facebook Libra.
Changchun Mu – previously deputy director of the payments and settlement division at the People’s Bank of China (PBoC) – recently stepped into the lead role at the Digital Currency Research Institute, reports Shanghai Securities News.
According to the state-run news source, Mu recently published details on PBoC’s digital currency – apparently being carried out in a secret office away from the bank’s Beijing headquarters – describing it as a digital currency and electronic payment tool with “value characteristics.”
“Its functional attributes are exactly the same as paper money, but it is just a digital form,” Mu said.
Perhaps most notably, he set out some of the digital currency’s technical aspects, and compared it with Facebook’s Libra.
PBoC’s digital yuan will be able to be transferred between users without an account and without a mobile or internet network, the report cites Mu as saying. Providing a user’s mobile phone has a wallet, the digital currency can be transferred to another person by placing the two phones in physical contact. Presumably, this feature is enabled by near-field communication (NFC).
“Even Libra can’t do this,” Mu said.
PBoC’s digital currency also doesn’t need a bank account to be used, and is “free from the control of the traditional bank account system,” Shanghai Securities News cites Mu as saying. He further suggested it allows users to preserve their privacy when using the system.
However, the digital currency will be delivered via commercial banks like fiat currency. The banks must open accounts with the PBoC and buy the token at 100 percent value. After that, users may open digital wallets for the digital currency through the banks or commercial organizations.
According to the report, Mu added that the main reason for developing the digital currency is “planning ahead” to protect monetary sovereignty and China’s legal currency. That may be a hint that the advent of Facebook’s Libra is behind the sudden rush of development at the central bank.
Former People’s Bank of China (PBoC) governor Zhou Xiaochuan said in July that “Libra has introduced a concept that will impact the traditional cross-border business and payment system.”
As such, China should “make good preparations and make the Chinese yuan a stronger currency,” Zhou said.
Yuan image via Shutterstock