While it didn’t release details of its plans, it is likely to be a crypto currency, based on the block chain technology which is used for Bitcoin.
The major difference between the planned Chinese crypto currency and Bitcoin would be control.
Whereas Bitcoin is anonymous in much the same way as physical cash, the new Chinese crypto currency would be issued by the PBOC, which says it wants to use its control over the currency to reduce money laundering, tax evasion and other criminal acts.
Other countries, apart from China, are also developing their own crypto currencies – for example the Philippines is working on an e-Peso, while Mexico is racing to introduce the Peso Digital, which would use block chain technology and be under the control of the Mexican central bank.
Meanwhile Bitruble, a new Russian crypto currency, is also being developed and it too would be issued and circulated by the country’s central bank.
There are many challenges to developing a crypto currency as it needs to have similar benefits to physical cash – such as anonymity, portability, transparency and reliability, but central banks will need to have some control in order to manage monetary policy. Moreover, governments like the idea of using a crypto currency to track money transfers and raise taxes.
To resolve such dilemmas, the Mexican central bank plans to have three block chains.
The first would be modeled on Bitcoin’s, allowing anonymous, transparent and irreversible transactions of the Peso Digital between two people without any intermediaries; the second would be for large interbank transactions; the third would be linked into the tax system.Thanks to its experience with Bitcoin, China already has the technology, markets and skilled people that it needs to develop its own crypto currency. Although in December 2013 the Chinese government barred banks and financial institutions from treating […]
