The new digital currency will be distributed in a first stage among seven major financial institutions in the country, including four banks as well as companies Alibaba, Tencent and Union Pay.
China’s main financial institution, the People’s Bank of China (PBOC), announced that it will launch its new digital currency, called DC/EP, in early November this year.
According to information reviewed by Forbes, the new digital currency will be distributed in a first stage among seven institutions. Including four of the world’s largest banks and two very important local companies within the country.
The former executive of the Construction Bank of China, Paul Schulte indicated that in addition to the institution he represented, the other entities that will receive the new digital currency are the Bank of China, Industrial and Commercial Bank of China, Agricultural Bank of China, as well as the companies Alibaba, Tencent and Union Pay.
An unidentified source with knowledge on the case validated Schulte’s statements, indicating that there is also an additional institution that could receive the digital currency.
He also indicated that the People’s Bank of China has been ready to launch DC/EP for more than a year. But, they are waiting for the right moment to officially announce it.
A first stage
Regarding the phased launch, the key official behind the development of the digital currency, Mu Changchun, indicated at the time that this new prototype operates entirely on Blockchain. But, that there was no capacity to support transactions by the country’s 1.3 billion citizens.
In theory, the final version of DC/EP can support up to 300,000 operations per second. But, implements other properties not directly associated with block technology.
Originally the central bank authorities began their investigation into it in 2014. But according to many analysts, the measure comes into place in November of this year as a way to go one step ahead of Facebook. They (Facebook) scheduled the launch of its new digital currency, Libra, for the beginning of 2020.
On the other hand, among the hypotheses surrounding DC/EP, some argue that the launch comes at this moment and not before because the government already has the mechanisms to exert greater financial and social controls on the population, so the new cryptocurrency would come to encircle the country’s residents more economically speaking.
A research published a few weeks ago detailed that between China and Russia the use of Tether was proliferating. Precisely because of the advantages it offers to carry out commercial operations.
However, the strongest point of this discussion has as its axis the opacity with which the Chinese government acts on the basis of the best known crypto currencies.
In 2017, the People’s Bank of China requested the closure of all exchanges that operated within the country in an attempt to prevent digital currencies from gaining more popularity and affecting the financial performance of the local currency.
A recent court ruling in July granted Bitcoin “virtual property” status.
Although the state designed measures to obstruct the trade of digital currencies at the local level, on the other hand it promotes the development of mining operations within certain provinces of the country, precisely because of the low costs of electricity and the amount of electricity generated through renewable sources.
1.3 billion users
With the goal of less aggressively displacing digital currencies such as Bitcoin, Ethereum or Tether, the new DC/EP will be distributed among the main banks and payment providers approved by the People’s Bank of China, which together capitalize 90% of the local market share.
The launch of the new digital currency also aims to displace the use of cash, seeking for people to operate with a payment mechanism that is fully traceable, which leaves no room to circumvent in any way the controls imposed by the local government.
The entities that will receive the cryptocurrency in a first stage will carry out the distribution of it among the more than 1,000 residents. This was confirmed by an anonymous source during an interview by Forbes.
However, some critics say that finally in November China faces one of the biggest fire tests of all its history, because at that moment we will see if the project succeeds in stalling in the middle of this moment in which the country’s citizens feel that their freedoms and financial autonomy are seriously compromised.