China central bank’s virtual currency nears completion

In the image: A fifth-series 20 renminbi yuan bill shown next to the location depicted on the bill (2017); Image attribute: David R. Tribble

Development of a digital currency by People’s Bank of China [PBOC], a digital currency that will be implemented to help boost trade and deal with China's economy and resource issues, is nearly complete according to a recent announcement by Deputy Chief in the bank's Payment and Settlement Division Mu Changchun.

Changchun said during a recent China Finance 40 Yichun Forum that the virtual currency can now be said to be ready. According to the announcement, the research group from the bank has made a prototype and adopted blockchain architecture in the development of the coin. During implementation, it will act as an alternative to MO and so will not affect current monetary transmission mechanism and other aspect of money in the economy. Implementation and usage will also observe current regulations on cash management, anti-money laundering and counter-terrorism financing.

China has close to 1.4 billion people in population and high concurrency is needed in order for the digital currency to reach good impact at the retail level. Hence, the bank will adopt technical neutrality and will not presuppose technical routes in implementing the currency. Rather, they will not necessarily rely on a single technical route to achieve implementation to masses. The virtual currency will be implented in a two-tier structure in order to deal with the difficulties of accessibility and public willingness to use it or in order to order to increase accessibility and willingness by public to use it.

The first tier will see the bank converting and issuing to banks or other operating agencies, which will then transfer to the public in the second tier. The second tier not only encourages participation of other banks and financial operators to ease access but also to encourage full play to the resources, encourage innovation, usage of talents and competitition for excellence in implementation. It also distributes risks of implementation and usage to many parties and helps to avoid financial disintermediation. Commercial banks will pay full amount or 100% of reserves to the People's Bank of China, which will also guarantee their liabilities with its credit.

The announcement follows research and development of the currency for almost 5 years since formation of the Digital Currency Research Group in 2014. Unlike Bitcoin or other forms of cryptocurrencies, theirs will be a centralized digitized form of renminb.

In 2016, the then governor of PBOC Zhou Xiaochuan announced that the digital asset will not immediately replace fiat currency. However, according to Xiaochuan, it would facilitate trade by reduce operating costs, increase efficiency, and enable a wide range of new applications.

David Kariuki

David Kariuki likes to regard himself as a freelance tech journalist who has written and writes widely about a variety of tech issues that affect our society daily, including cryptocurrencies (see and; climate change (, OpenSim and virtual reality (see He is currently pursuing a MSc in Environmental Management at Open University. He does write here not to offer any investment advise but with the intention of informing audience, and articles in here are of his own opinion. Anyone willing to use any opinion here as advise to invest in crypto should obviously take own responsibility and accountability of their losses (or benefits) thereof. You can reach me at or

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