Forbes reports that China’s central bank is preparing to roll out a state-backed digital currency and issue it to certain institutions and major corporations in the country.
These include the Industrial and Commercial Bank of China, the Bank of China and tech juggernauts Alibaba and Tencent. The report also says that the tech behind the cryptocurrency, dubbed DC/EP (Digital Currency/Electronic Payments), is already prepared and that it could launch as soon as November 11th, China’s busiest shopping day.
The news comes after China has been actively cracking down on domestic and international trading of cryptocurrencies by its citizens. In fact in 2018, the Chinese government banned cryptocurrency exchanges from conducting operations within its borders.
An anonymous source who is reportedly close to the matter told Forbes that the plan, which bears conceptual similarities to Facebook’s Libra, is to launch and eventually make the digital currency available to the United States and other countries through relationships with correspondent banks in the West. When that will occur however, remains unclear.
The move comes amid growing tensions between China and the US which have caused the Chinese yuan to hit an 11-year low, prompting President Trump to label Beijing a currency manipulator. While the designation is simply symbolic, the move has increased, if not escalated, trade war tensions between the world’s two largest economies.
It’s worth pointing out that The Global Times, China’s national English language newspaper, claims via Twitter that China’s central bank has rejected reports of plans to launch a state-backed digital currency in the coming months.
Remains to be seen how this story will develop.