Global race to harness blockchain technology gathers pace
The vice-chairman of the China Centre for International Economic Exchanges (CCIEE), Huang Qifan, says the country is determined to develop the world’s first sovereign digital currency.
In a speech Huang stated: “The People’s Bank of China has been studying DCEP (digital currency electronic payment) for five or six years, and I think the technology has matured. The People’s Bank of China is probably the first central bank to introduce digital currency in the world.”
The announcement of a state-backed stablecoin follows last week’s comments from President Xi Jinping, emphasising the importance of blockchain technology and the need to accelerate its development throughout China. Xi’s support for the technology saw Bitcoin (BTC) surge from a monthly low of $7430.87 (£5785.68, €6714.73) to a monthly high of $9548.84 (£7444.28, €8615.11).
Cryptocurrencies are currently banned in China following a 2017 law from the ruling Chinese Communist Party (CCP), which disliked their decentralised nature and innate privacy. A state-backed digital currency, still utilising blockchain technology, is seen as an acceptable alternative.
In a challenge to Facebook’s Libra stablecoin, Huang Qifan outlined his belief that national governments and central banks, not corporations, should issue digital currencies and control the emerging digital monetary system. He spoke of the possibility of forming a new rule whereby digital currencies could be linked not only to existing fiat-currencies but also to sovereign credit, fiscal revenue, national GDP and gold.
Huang also spoke of China’s desire to free itself of American technology and systems in the cross-border liquidation of the Chinese renminbi (RMB). He criticised the hegemonic pro-US nature of the Clearing House Interbank Payments System (CHIPS) and the Society for Worldwide Interbank Financial Telecommunication (SWIFT).
“SWIFT is an outdated, inefficient and costly payment system,” he said. “ Since the establishment of SWIFT 46 years ago, the technology has been updated slowly and the efficiency has been relatively low. International wire transfers usually take three to five business days to arrive. At the same time, SWIFT usually charges a fee of one ten-thousandth of the settlement amount, and has obtained huge profits by virtue of the monopoly platform.”