China is developing its own version of Bitcoin

China is actually more accepting of Bitcoin than most people would expect. While financial institutions aren’t allowed to hold or trade the digital currency, private parties are. In fact, the country has been interested in the idea of Bitcoin for a while now, and its central bank has been researching digital currency technology since 2014, with the goal of releasing its own such currency in the future. Rather than being a Bitcoin alternative, however, this digital currency would be more like the complete opposite of Bitcoin, as it would be closely tied to financial institutions, and would be extremely easy for authorities to monitor. Instead of decentralization and privacy, China’s digital currency would focus on ease-of-use, low transaction costs, and transparency. 

The People’s Bank of China (PBoC), the country’s central bank, is moving toward the launch of its own digital currency. The PBoC said in a 20th January release that it had held a meeting discussing the possibility in Beijing. Attendees included central bank governor Zhou Xiaochuan and deputy governor Fan Yifei, as well as a group of “relevant research institutions, major financial institutions and advisory bodies of experts”. Notably, the central bank put together a team dedicated to digital currency research in 2014 – the work of which played into the Beijing meeting. In addition, the PBoC received input from Citibank and Deloitte, as it weighed up how to issue the digital currency. According to an unofficial translation of the release, the meeting urged the PBoC’s digital currency research team to “actively absorb the important results” and to “further clarify the strategic objectives of the central bank-issued digital currency”. Further it should research key technologies and various digital currency applications for the “early introduction of digital currency issued by the central bank”. While the release gave no precise indication as to when the digital currency might be released, the central bank did give some indication of the factors driving its development. Design of the digital currency, it said, should be based on “economic, convenience and safety principles’, while low cost and “wide coverage” were also requirements.