[Part1] Digital Currency Trend of China

- China is developing DCEP (Digital Currency Electronic Payment) in 2020 - - Increased demand for alternatives to cash payment. The Chinese government promotes it for the globalization of the yuan -

□ Global competition for digital currency

ㅇ On June 18, 2019, American IT company Facebook announced plans to issue cryptocurrency Libra in collaboration with 27 global companies such as Mastercard and Uber.(Their goal is to issue Libra in 2020.) The private sector is actively discussing on the digital currency and central banks are also discussing on the issuance of digital currency.

ㅇ CBDC(Central Bank Digital Currency) is a fiat currency issued electronically by a central bank. Recently, central banks in major countries are considering issuing CBDC and studying CBDC.
– China is ahead of other countries in the competition for issuance of CBDC. In 2019, China continued to announce detailed plan for the digital currency. On October 28, 2019, Huang Qifan, vice chairman of China Center for International Economic Exchange (CCIEE), said at the 1st Wai Tan conference that the People’s Bank of China has been working on digital currency for five years and will announce plans to issue digital currency very soon.
– On January 21, 2020, central banks from the EU, the UK, Japan, Canada, Sweden, and Switzerland, jointly launched a CBDC research project and studied the possibility of the issuance of CBDC. In addition, central banks in many countries recently researched various digital currencies, including CBDC, and started a test operation.
– On February 7, 2020, 70 members of the Liberal Democratic Party, the ruling party of Japan, announced a specific plan to issue digital currency. Three days later, they announced that plans to issue Japanese digital yen within two or three years should be included in the medium and long-term government policies.
– On February 5, 2020, the Federal Reserve of the United States announced that it was studying CBDC.

□ China accelerates the development of digital currency

ㅇ As mobile payments become popular, China is changing into a cashless society. The Chinese government is pursuing issuance of digital currency to accelerate the digitalization of payment method and raise the status of the yuan in the current dollar-based currency system.
– China has been researching digital currency issuance since 2014. People’s Bank of China established the Digital Currency Research Institute in December 2016. They started a digital yuan project and have applied for 84 related patents.
– On October 24, 2019, Chinese President Xi Jinping said at the 18th Seminar of the Chinese Communist Party, “Let’s accelerate the issuance of digital currency by using blockchain technology and achieve independent innovation in the internal economy.”
– IDC, an IT market consulting agency, predicted that 10% of Chinese cities will use digital currency as a major payment method in 2023, and that digital currency will become a new growth engine of the Chinese economy and lead the development of the e-commerce industry.

ㅇ According to China’s economic magazine Golden Finance, the digital currency issuance project involved China’s four largest banks (China Construction Bank Corporation, Industrial and Commercial Bank of China, Bank of China Limited, and Agricultural Bank of China) and China’s three largest phone companies (China Mobile, China Telecom, and China Unicom), and is expected to select ShenZhen and Suzhou as pilot test areas.

Kim Hak-bin(2020.04.10) 중국의 디지털 화폐 동향
retrieved from http://news.kotra.or.kr/user/globalBbs/kotranews/3/globalBbsDataView.do?setIdx=242&dataIdx=181105

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