China to Soon Launch its State-Backed CryptocurrencyAugust 18, 2019
Mu Changchun, deputy director of China’s central bank, stated that the state-backed cryptocurrency from China would depend on the “Two Tier” system, which will permit both the People’s Bank of China and the Financial Institutions to issue the currency.
Previously, China was resistant to decentralized cryptocurrencies like the Bitcoin. China is also the home to some of the world’s most significant cryptocurrency mining facilities, and they have been researching into the potential of their own cryptocurrency ever since 2014.
Financial analysts and industry experts opinion that other counties will feel left out if they do not come out with a cryptocurrency of their own.
Don Guo, CEO of Broctagon Fintech Group, stated, “It’s clear that China understands the opportunity cost of missing out on cryptocurrency growth.” He further stated, “Although a certain level of regulatory scrutiny is wise, other countries should consider taking China’s lead.”
International competition is increasing. And, digital currencies are making it to the mainstream. China is all set to get ahead in the game. They are likely to take up the lead position of being the key asset class of the future.
The new cryptocurrency from China might theoretically reduce the cost of circulating the traditional paper currency. However, adding security to digital transactions should be done at a faster pace. If new cryptocurrencies should be rolled out on a significant scale, then the currency should be able to cope with substantial transactional volumes.
The patents which have been registered by the People’s Bank of China reveal plans for mobile wallet, which in turn will permit swapping the Yuan for the cryptocurrency. This suggests that China will have more control of the money supply, and eventually it will be possible to track payments which are made across the network.
The current scenario in the global financial industry is disturbing. Despite all these developments and the existing volatility trends, this is ideally the best moment for Bitcoin to shine. This is also the time when Bitcoin will be able to prove that it is immune from political risks.
China has been working continually to focus on the economic model of the country away from its dependence on foreign exports. While the Trump Administration is all set to call China the currency manipulator, neither the IMF nor the WTO would support the view of the Trump administration. If the US continued with retribution on China, it would be vulnerable to harmful international sanctions. There might be a probable currency war risk.