The People’s Bank of China intends to issue its own digital currency, similar to Bitcoin. The decision was made after organizing a research team in 2014.
According to the bank, the move is aimed to tighten control over the banking sector by the government.
Official data showed that Chinese people actively use remote payments, so a new cryptocurrency is not likely to prove a hit in the country. Users in China prefer online payment methods such as Alipay or WeChat. However, sellers will face some difficulties associated with digital payments being directly received from buyers. Thus, transaction costs will be lowered due to the fact that the middleman will be excluded from the process of payment of goods or services.
As a result, the Chinese central bank is set to become one of the first central banks to issue digital money. Its decision is based on the opinion that if it cannot control cryptocurrencies, it needs to issue its own digital currency.
"Getting to know more precisely how much banks lend, where the money goes and the pace of credit creation is key to curbing money laundering and making monetary policy more effective," said Duan Xinxing, vice president of Beijing-based OKCoin Co., one of the country’s biggest bitcoin exchanges. Launching a digital currency will allow the PBOC to monitor risks in the financial system and monitor transactions economy-wide, he said.
