They had been around for a while, but it was not until 2017 that cryptocurrencies really gained global attention as the price of a Bitcoin surged to almost $20,000.
When Facebook announced Libra, its new cryptocurrency payment system, last year, the conversation hit all levels of society and politics. Early this year, 80 percent of central banks were working on a central bank digital currency (CBDC), 40 percent were experimenting with proofs of concept, and 10 percent, mostly in emerging economies, were running pilot projects.
But what happens in China is of key importance. The purchase and sale of cryptocurrencies are still banned in China, but things are moving quickly.
The People’s Bank of China, the country’s central bank, started research on a government-backed cryptocurrency way back in 2014. Beyond replacing cash and improving financial inclusion, the PBOC’s long-term goal is to improve the efficiency of transactions across the country’s financial system through the use of digital currency.
Ironically, amid all this, the COVID-19 pandemic accelerated the rise of CBDC. Indeed, viruses causing some types of common influenza have survived on banknotes for up to 17 days. So, as former Bank of China president Li Lihui said, a digital currency’s efficiency, cost-effectiveness, and convenience will make it especially desirable during an epidemic.
In April, the Chinese government began testing “e-yuan” for payments in several major cities, including Shenzhen, Suzhou, Chengdu, and Xiong’an New Area, south of Beijing. The government is also expected to expand pilot programs at the venue of the Beijing 2022 Winter Olympics.
It seems, driven by several factors, China could become the first major economy to use a CBDC.
Read more: http://www.ecns.cn/news/2020-11-06/detail-ihacshup9271834.shtml