CGTN | 10-Aug-2020 | By Yao Nian
China’s four major state-run commercial banks are reported on Thursday to have started large-scale internal testing of a digital wallet app, moving a step closer to the official launch of the world’s first sovereign digital currency.
Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China are piloting the digital renminbi with the central bank in major cities, including Shenzhen. Users in the trial can use the digital wallet to top up accounts, withdraw money, make payments, and transfer money after registering with their mobile phone number. The banks are also testing a scenario where users can transfer money without internet. The move is in line with a key task set by the central bank, as it said on Monday that it would “actively and steadily promote the research and development of the state digital currency” during the second half of this year.
CGTN: What are the differences between a legal digital currency and Bitcoin or Libra?
Qu: Digital currency is issued by the central bank, authorized by the legislature. It needs to be legal. In many countries, for it to be legal it requires you to hold it with a real name, a legal bank account, or a registered account. And also, the money will be anchored to the nation’s credibility. The nation will use all its power to guarantee the repayment of the currency, because, in essence, all currencies issued by the central bank, are basically debt.
Bitcoin’s value has been anchored on the underground market on the internet, which is huge. According to my calculations, it’s 1.5 trillion U.S. dollars a year. So Bitcoin does have a value, but most of the value is something you don’t like to see, child pornography, drug trafficking, human trafficking, arms trafficking, something like that.
And about Libra. That’s something even we cannot see the true value in it. They just tried to invent a digital currency to pay for Facebook services all over the world. It’s doomed to be a failure, because a universal currency cannot exist at this stage. For different countries and regions, their productivity is different, so there is no way to use one currency to exchange for all. You cannot invent just one coin called Libra to pay for the same services in Libya, China, Australia, Japan, and Thailand.
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