China’s central bank will soon launch a state-backed cryptocurrency
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, his former employer, the Bank of China, the Agricultural Bank of China; two of China’s largest financial technology companies, Alibaba and Tencent; and Union Pay, an association of Chinese banks, will receive the cryptocurrency. The plan to use a diverse set of China’s trusted institutions to disperse the cryptocurrency is reminiscent of a number of other ideas currently percolating around the world. For instance,planned libra cryptocurrency will be backed by a basket of currencies issued by central banks with support from companies like Mastercard and Uber in the United States, Vodaphone in England and Mercado Pago in Argentina.
“This dual delivery system is suitable for our national conditions,” said Mu. “It can not only use existing resources to mobilize the enthusiasm of commercial banks but also smoothly improve the acceptance of the digital currency.” The DC/EP can achieve this kind of volume only because it is not a “pure blockchain architecture,” according to Mu, and therefore it doesn’t need to wait for groups of transactions to settle in a block. Like other permissioned blockchains that not anyone can use, the DC/EP is centrally managed, in this case by the central bank, meaning the digital currency remains a liability of the bank and the debtor/creditor relationship is unchanged, according to Mu.
In December 2017, another country accused of devaluing its currency, Venezuela, revealed plans for its own cryptocurrency, backed by oil and called the petro. After much hullabaloo, the currency somewhat officially launched in 2018, but it isn’t available on most international exchanges because of a U.S. embargo and has been almost impossible to accurately value.
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