21 Jan 2016
The People’s Bank of China (PBC) has this week announced plans to launch its own digital currency.
The bank has been exploring digital currencies since 2014, when it set up a dedicated team to explore their possible applications. The bank has received input from Citibank and Deloitte as part of the review process.
It is believed that the necessary framework and infrastructure are already in place for China to launch its own digital currency, but in a statement posted on the bank’s website there was no reference to a specific timeframe or the technology it would be using to issue the digital currency.
There was also no explanation of how the digital currency would relate to China’s fiat currency, the yuan.
The statement enumerated the perceived benefits of a state-backed digital currency, including cutting the costs of paper money circulation and issuance, increasing the transparency and convenience of transactions, curbing tax evasion, money laundering and other criminal activity, and granting more control to policymakers so they can monitor money supply more closely.
Given that China is some way behind the international standards curveball in tackling money laundering and financial crime, institutions concerned to ensure that they do not facilitate predicate crime will have to consider carefully the extent to which, if at all, they engage with this initiative when it is launched.
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