The government of China is becoming more concerned with the rapidly growing platforms providing payment solutions globally. The government is worried about the possibility of payment solutions being controlled by private companies. A professor of international trade and economics at Cornell University, Eswar Prasad, said he believes that the People’s Bank Of China wants to create a CBDC to influence the payment market.
Professor Eswar, in his discussion with CNBC, also said that in his opinion, the practical uses of the digital currency in the country would be limited. He says that the Chinese central bank wants to ensure that Central bank-issued currency still appeals to the retail market.
Global CBDC Development And China’s Influence
CBDCs are becoming increasingly popular amongst many countries in the world. Blockchain technology has revealed many flaws with fiat currency, and governments are working fast to maintain the relevance of central bank-issued currency. This is what has inspired the production of CBDCs.
UK And CBDC
Last month in the United Kingdom, the Bank of England had meetings with many cryptocurrency experts. The aim is to understand what it will take to mint its own CBDC. Legislators believe it will take years for the process to be complete, from considering it to building a framework and launch.
The Bank of England had previously informed people not to expect the launch of a CBDC before the second half of the decade. While China, on the other hand, keeps getting closer to the launch and adoption of their digital Yuan. The Bank of England has clarified that a decision has not been made yet to mint CBDCs; the idea is only being considered.
The Bank of England has revealed that it will continue consultations next year. The authorities have confirmed that if the idea is launched, the CBDCs will work parallel to notes and not replace them. The Bank of England is trying to weigh up all possible risks the innovation could cause.
The United States
The United States has also indicated an interest in minting its own CBDC. The Reserve bank has on several occasions said it will disclose its plans towards achieving it or whether it was something it was going to do in the first place. It last promised to make the statement at the end of Q3 but has failed to do so.
The Japanese government has urged its main financial body to increase its launch of a digital Yen. The new urgency comes as they fear possible global economic impacts with China seemingly at the forefront of CBDC launch amongst developed nations. To this end, the government is getting more personnel to establish the new digital currency.
These steps are expected to pressure the Bank of Japan to launch the digital Yen. A minister concerned with economic security, Takayuki Kobayashi, says other countries getting ahead of Japan in the development of CBDC may pose a security threat to the country. He said that things have to move faster.