Binance Research, the market research and analysis arm of Binance, announced a new report that pertained to China’s new Central Bank Digital Currency (CBDC), which is the central bank’s own digital currency.
The report quoted People Bank of China (PBoC) and said the CBDC would operate on a two-tier system namely: The PBoC would issue and redeem China’s CBDC via commercial banks and Commercial banks would be responsible for re-distributing China’s CBDC to retail market participants.
The second layer was covered earlier by Crypto-News India, when we reported that the recipients of the initial batch of the cryptocurrency were China Construction Bank, the Industrial and Commercial Bank of China, the Bank of China, the Agricultural Bank of China, and the Chinese banking association Union Pay. Apart from that, Alibaba and Tencent will also receive the central bank-issued digital currency.
Mu Changchun, Deputy Chief in the Payment and Settlement Division of the People’s Bank of China (PBOC), had stated recently that central bank would launch its own currency.
At the time, the senior official had said, “People’s Bank digital currency can now be said to be ready.” Changchun claimed that the central bank has access to a prototype version of the digital currency and that the PBOC has fully adopted and integrated the use of blockchain technology into its infrastructure. He further added that they would not be relying on ‘pure’ blockchain technology, citing difficulties in scaling.
Binance Research stated about the possible motivation for the PBoC to pursue the CBDC proposal and was quoted as saying, “Following Facebook’s recent Libra whitepaper release, the Chinese central bank accelerated its plans to launch its own digital currency amidst growing concerns about continued capital outflows that could weaken the renminbi (RMB).
The report also highlighted the cons of CBDC such as hindering potential curtails on individual financial privacy.