The People's Bank of China has been working on a state-backed cryptocurrency for more than a year, it appears, as news emerges that China's central bank is preparing to roll out the first central-bank backed digital currency in time for China's now legendary Singles Day on 11 November. Forbes reports that the PBOC's "cryptocurrency" is designed to replace coins and cash already in circulation, with its supporters pointing out that it can handle 300,000 transactions per second. (Visa does about 1,700 transactions per second while Libra is said to be aiming for 1,000 per second). However, the putative currency will not be a cryptocurrency, no matter how many times Forbes repeats it.
"China's central bank will launch a state-backed cryptocurrency and issue it to seven institutions in the coming months, according to a former employee of one of the institutions who is now an independent researcher," writes Forbes. "Paul Schulte, who worked as global head of financial strategy for China Construction Bank until 2012, says the largest bank in the world, the Industrial and Commercial Bank of China, the second largest bank in the world, his former employer, the Bank of China, the Agricultural Bank of China; two of China's largest financial technology companies, Alibaba and Tencent; and Union Pay, an association of Chinese banks, will receive the cryptocurrency."
The digital yuan will be issued by the central bank and distributed through these seven institutions. It's hard to know where to start here, but for a start, this is not a cryptocurrency. It's a centralised currency, issued by the central bank, which will control the amount issued. So why is China at this at all? Facebook. China has mirrored and improved US social networks and ecommerce, all the while blocking these US private surveillance systems while installing its own. Recognising the value of Facebook's 2 billion-plus network, China wants its own version of Libra. "In July, Wang Xin, head of the PBoC Research Bureau, said that Libra threatens the international monetary system and countries should develop their digital currency to prevent the negative economic consequences," Cointelegraph reported. "Other authorities expressed the need to strengthen the national currency through the issuance of digital money."
The word from China seems to be that in realising its own design for a digital currency, the authorities later saw that their idea was similar to Libra. Comically, there's an element of truth to this, as both will be centralized. The major difference at this remove is the element of identity, as Libra claims it will rely on decentralised digital identity to separate users from surveillance systems.
German fintech Raisin, which focuses on the unsexy world of "brown cardigans and zimmer frames" (ie pension and savings funds), is the latest fintech to get a banking licence. Every bank is now professing to be a fintech or a tech company, while the fintech are swooning after banking licences. Never a dull moment, eh?