The People’s Bank of China seeks to legalize digital yuan. The central bank also proposed banning any yuan-pegged digital tokens in the new draft, effectively killing off any competitor to its central bank digital currency. PBoC published a statement late last week soliciting feedback from the public on the new draft law. Citizens have until November 23 to submit their feedback on the drafted amendments. The newly drafted law seeks to amend the “Law of the People’s Republic of China on the People’s Bank of China.”
The proposed amendment will legalize Chinese CBDC.
The new central bank draft is also seeking to ban any competitor to its digital yuan. Under the same section, the bill prohibits any individual or entity from making or issuing any tokenized note or digital token that may replace the Renminbi’s market circulation. The proposed amendment will officially legalize the digital currency electronic payment (DCEP), China’s long-awaited CBDC. While the PBoC has already conducted extensive pilots with DCEP, this amendment seeks to make it an official legal tender in the country.
The PBoC draft could also ban Facebook’s Libra in China.
In banning competitors, the PBoC is acting on concerns that managing the money supply would be more difficult if it allows private digital currencies in the market. According to a Japanese financial newspaper Nikkei report, this amendment could also effectively shut the door for Facebook’s Libra in China. The newspaper further mentioned that digital yuan would increase the PBoC’s financial surveillance capabilities. Several from the crypto community had also raised this point earlier, stating that the digital yuan could give the Chinese government more intrusive power over people’s financial activities. However, the central bank had mentioned that they would provide people with “controlled privacy” while dealing with digital yuan.