China to begin issuing digital currency in November?

The People’s Bank of China (PBOC) is preparing to launch a central bank-backed digital currency on 11 November, according to a Forbes report — and is to kickstart usage by distributing it to UnionPay, Tencent, Alibaba and several Chinese banks in time for consumers to use it on Singles Day, the country’s busiest shopping day.

Seven or eight organisations will receive the new Digital Currency/Electronic Payments (DC/EP) from the central bank and “will then be responsible for dispersing the cryptocurrency to 1.3bn Chinese citizens and others doing business in the renminbi, China’s fiat currency,” Forbes says.

Mu Changchun, deputy director of PBOC’s payment and settlement division, revealed last month that the central bank has been working on a Central Bank Digital Currency (CBDC) for the past five years, that this work is now complete and that it will use a two-tier operating system where the PBOC acts as the upper level (tier one) and the country’s commercial banks as the second level (tier two).

This approach will improve accessibility, both spread and reduce risk, avoid disintermediating commercial banks and “give full play to the resources, talents and technological advantages of commercial organisations,” he explained.