China is set to introduce its own digital currency

As Facebook reies to launch its answer to bitcoin, China is set to introduce its own digital currency -- one that could allow government and central bank to see what people spend ir money on, according to analysts. Far from libertarian ideals of cryptocurrencies, whose anymity allows users to buy and sell without leaving a digital trail, China's mooted e-cash system will be tightly regulated, experts say, and run by People's Bank of China, central bank. It "would give PBoC greater insight into transactions throughout country," analysts at Beijing-based research firm Trivium China said in a te.

In late September, central bank goverr Yi Gang said China's new currency may be associated with existing electronic payment systems, such as popular WeChat and AliPay phone apps, which are widespre and allow yuan transactions via bank accounts. While he gave timetable, Chinese media are putting ir money on a vember 11 launch to coincide with "Singles Day" -- a massive, annual online sales event. Yi did t say what shape currency would take.

"We will t predetermine technical path," he said.

"We may consider blockchain techlogy or ar techlogy that evolves from existing electronic payments." It is likely to be more akin to electronic money, stored on a physical medium, than a cryptocurrency such as bitcoin which is based on a computer network.

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China's cryptocurrency

One thing is certain: "We will here to centralised manment," Yi said, polar opposite of philosophy behind cryptocurrencies like bitcoin. China was once a stronghold of bitcoin. Just two years ago, three major Chinese bitcoin tring platforms -- BTC China, OKCoin and Huobi -- accounted for more than 98 per cent of world tre, according to benchmark site bitcoinity.org. But sector was unregulated and transactions were invisible to authorities -- anama to Beijing, which shut down tring platforms in 2017.

"You can be interested in techlogy behind bitcoin and t like way it is implemented, and want to create your own bitcoin with your desired characteristic," said Stanislas Pogorzelski, editor-in-chief of specialist site Cryptonaute.fr.

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In a country where social credit systems and facial recognition cameras are becoming widespre, a new Chinese cryptocurrency could allow government to "more closely monitor actions of its population," he said. Its purpose is to "replace cash," he explained, " last bastion of privacy." " digital currency will allow PBoC to collect new information that is impossible to collect when a transaction is through paper currency," said Song Houze, a research fellow at think tank MacroPolo, which specialises in Chinese ecomy.

China's moves coincide with Facebook's plans to launch a cryptocurrency called Libra. emergence of Libra was an "alert" for Beijing, according to a former senior central bank official quoted in Chinese press. Due to roll out next year, Libra should offer a new payment method outside tritional banking channels to buy goods or send money as easily as an instant mess. Like bitcoin, Facebook's virtual currency "represents a competition and threat" to yuan when Beijing is anxious to stabilise its currency, said Song.

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But it is t only authoritarian Beijing that is worried about growth of cryptocurrencies. Facebook's plan has faced heavy criticism from regulators and lawmakers in United States and Europe, with chief executive Mark Zuckerberg expected to face questioning from Congress. French Ecomy Minister Bru Le Maire has warned that Libra poses a threat to "monetary sovereignty" of governments and could t be authorised in Europe. French Senate has vocated creation of a public cryptocurrency, under aegis of European Central Bank.

controversy has seen huge financing firms like Visa, Mastercard and eBay pull out of scheme. neless, many analysts expect more and more transactions around world to move online, in one form or ar. For China, a home-grown system of electronic cash controlled by central bank offers convenience that consumers want with control that authorities crave. People's Bank of China, must "stay relevant in an of declining us of paper currency," said Song.

Picture: For representational purpose (Pixabay)