China: Sovereign Crypto is for “Rainy Day”

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China has said that its forthcoming sovereign cryptocurrency will “bear some similarities to Facebook’s Libra coin” according to Reuters, who cited Mu Changchun, deputy director of the People’s Bank of China’s payments department. Changchun also said that the country was creating the currency “to plan ahead for a rainy day”, suggesting that the token forms part of any number of considerations, from insurance against an escalating China-US trade war to a full breakdown of the traditional financial system.

Safe as Banknotes

Changchun’s comments were taken from a transcription of a lecture he gave last week, which included further explanations of the reasoning behind the creation of the digital currency, the name of which is still unknown:

Why is the central bank still doing such a digital currency today when electronic payment methods are so developed? It is to protect our monetary sovereignty and legal currency status. We need to plan ahead for a rainy day.

Changchun added that the tokens would be as safe as traditional banknotes and would work without an internet connection. This is a step up from many existing cryptocurrencies, including BTC, which rely on an internet connection to send transactions. Sending BTC without the internet is possible, but it’s incredibly inconvenient and not feasible for most people. Changchun said that the token would “bear some similarities to Libra” but wouldn’t expand on this, except to say that it wouldn’t be a direct copy.

Libra’s Brother From Another Mother?

China has been researching a sovereign cryptocurrency since 2014, making noises at various points in the intervening years about the progress of the token. However, progress has ramped up significantly since Facebook’s Libra token whitepaper was released in June, as have announcements. Of course China’s advantage is that they can simply launch and roll out the token without the requirements of regulatory approval that Facebook must overcome, and it will be interesting to see how similar the two tokens are when it does finally launch, as well as how much it is used and how much information it will capture compared to existing payment methods.