China wants centralized digital currency after bitcoin crackdown

According to analysts, while Facebook is preparing to unveil its response to bitcoin, China is about to introduce its own digital currency that will allow the government and Central Bank to see what people are spending their money on.

Unlike the libertarian ideals of cryptocurrency, whose anonymity allows users to buy and sell without leaving a digital footprint, China's electronic cash system will be tightly regulated, experts say, and run by the people's Bank of China, the Central Bank.

This "will give the PBOC a deeper understanding of transactions across the country," analysts at Beijing-based research firm Trivium China said.

In late September, Central Bank Governor Yi gang said China's new currency could be linked to existing electronic payment systems, such as popular phone apps WeChat and AliPay, which are widespread and allow transactions with yuan through Bank accounts.

Although it gave no timetable, Chinese media is putting money into the November 11 launch to coincide with" singles Day " - a massive annual online sales event.

Yi did not say what form the currency would take.

"We will not predetermine the technical path," he said.

"We may consider blockchain technology or other technology that evolves from existing electronic payments."

It's probably more like electronic money stored on a physical medium than a cryptocurrency like bitcoin based on a computer network.

One thing is for sure: "We will stick to centralized governance," said Yi, the polar opposite of the philosophy of cryptocurrencies like bitcoin.

Its goal is to " replace money»

China was once a bitcoin stronghold.

Just two years ago, three major Chinese bitcoin trading platforms-BTC China, OKCoin and Huobi-accounted for more than 98% of global trade, according to the site bitcoinity.org.

But the sector was unregulated and deals were invisible to the authorities - anathema to Beijing, which closed trading floors in 2017.

"You may be interested in the technology behind bitcoin and you don't like the way it is implemented and you want to create your own bitcoin with the desired characteristics," said Stanislas Pogorzelski, editor-in-chief of the specialized site Cryptonaute.fr.

In a country where social credit systems and facial recognition cameras are becoming widespread, a new Chinese cryptocurrency could allow the government to "more closely monitor the actions of its population," he said.

His goal is to "replace money," he explained, " the last Bastion of privacy."

"The digital currency will allow the PBoC to collect new information that cannot be collected when a transaction is made through paper currency," said song houz, a researcher at the MacroPolo think tank specializing in China's economy.

"Competition and the threat"

China's actions coincide with Facebook's plans to launch a cryptocurrency called Libra.

According to a former senior Central Bank official quoted in the Chinese press, the appearance of the Scales was a "warning" for Beijing.

Next year, Libra is to offer a new way of paying outside traditional banking channels to buy goods or send money as simply as instant messages.

Like Bitcoin, Facebook's virtual currency "represents competition and a threat" to the yuan as Beijing seeks to stabilize its currency, song said.

But it's not just authoritarian Beijing that is concerned about the rise of cryptocurrencies.

Facebook's plan has been heavily criticized by regulators and lawmakers in the United States and Europe, and chief Executive mark Zuckerberg is expected to be questioned by Congress.

French economy Minister Bruno Le Maire has warned that the Scales pose a threat to the" monetary sovereignty " of governments and cannot be sanctioned in Europe.

The French Senate supports the creation of a public cryptocurrency under the auspices of the European Central Bank.

The controversy led to major financial companies such as Visa, Mastercard and eBay pulling out of the scheme.

However, many analysts expect that more and more transactions around the world will move online, in one form or another.

For China, the domestic electronic money system controlled by the Central Bank offers the convenience that consumers want, with the control that authorities crave.

The people's Bank of China should "remain relevant in an era of declining paper money use," song said. - AFP Relaxnews

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