The new head of digital currency at the People’s Bank of China (PBoC) recently said that the upcoming “Digital Yuan” had features that Facebook Libra does not offer. According to Shanghai Securities Journal, Changchun Mu, who was previously the deputy director of the payments and settlements department of the PBoC, recently became head of the Digital Currency Research Institute.
Mu recently revealed details of PBoC’s digital currency describing it as a digital currency and electronic payment tool with “value characteristics.” “The functional characteristics are exactly the same as the bills, but only in digital form,” Mr. Mu said. He also compared the new digital currency’s technical aspects with that of Facebook’s Libra.
According to Mu, PBoC’s digital yuan can be transferred between users without an account or a mobile or internet network. If your phone has a wallet, you can physically touch two phones to transfer a digital call to another. Perhaps this feature is possible with near field communication (NFC).
PBoC’s digital currency also eliminates the need for bank accounts and does not have control of the traditional bank account system. In addition, users can protect their privacy when using the system.
However, the new digital currencies will be delivered through the central bank, just like fiat currencies. Banks need to open an account with PBoC and buy tokens at 100% value. After that, the user can open the digital wallet for digital currency through the bank or commercial organization.
According to the report, Mu added that the main reason for developing digital currencies is a “future plan” to protect currency sovereignty and China’s legal currency. It may be a hint that the emergence of Facebook Libra is behind the sudden development of the central bank.
Former Governor of the People’s Bank of China (PBoC), Zhou Xiaochuan, had said in July,
“Libra has introduced a concept that will affect existing cross-border business and payment systems. China should make good preparations and make Chinese yuan a stronger currency.”