Date 8 November 2019 China’s President Xi Jinping has called on the country to boost the development of blockchain technology. Chinese President Xi Jinping has called for the stepped-up development of blockchain technology in the country. “Our prototype was actually based on pure DLT, but then we found that the DLT is not suitable for our ,” said Mu. Although President Xi, in his recent remarks, highlighted the importance of blockchain technology to the nation, Mu cited the weaknesses of the technology, such as those pertaining to scalability, network storage capacity, interoperability, security and privacy.
“As the central bank, we have to run a centralized system. Because we have to be in control of the whole monetary policy issues and macroeconomic potential issues, we have to keep centralized operations,” he said, “ for DLT, it naturally has the characteristic of decentralization. Mu said the central bank is “neutral” towards the technology used to power the digital currency, which will not be dependent on a sole technology platform. The idea behind the digital currency is to enable anyone, across and beyond the nation, who don’t have an account in the Chinese banks, to use a digital wallet and enjoy mobile payment services in China, Mu said.
Currently, Alibaba’s Alipay and Tencent’s WeChat Pay are the two major players in China’s mobile payment sector, accounting for over 90 percent of the market. China’s proposed digital currency is expected to curb their dominance. Mu, however, said he could only see a synergy between the digital currency and the two mobile payment services, rather than competition. “We just change their payment instrument from the commercial banks’ deposit money to the central bank’s money,” he said.
“We are not changing their use cases, their service will remain the same. Mu acknowledged that “stablecoins” like Libra would definitely present “a threat to the implementation of monetary policies and financial stability, especially for those countries with capital management and less strong sovereign currencies”. “All central banks should consider putting the project under the close supervision of central banks or international supervisory organizations, at least,” Mu said.
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