The People’s Bank of China is reportedly testing its own cryptocurrency, prompting speculation that China could be the first country in the world to run its own national cryptocurrency. According to reports, tests of the prototype digital currency have begun with mock transactions being made with the country’s commercial banks.
The bank has not made any official statement on the development of a national cryptocurrency and therefore no timetable indicating a launch date is available. Since May, both the State of Palestine and Russia have indicated that they want their own national currencies. In the case of the State of Palestine, it would solve two significant problems, firstly they don’t have money-printing facilities to make physical money, and secondly, they wouldn’t have to import the money and get it past the Israelis.
In China’s case, the money could be used by millions of Chinese who don’t have easy access to conventional bank services due to a lack of infrastructure. Additionally, charges on cross-border payments could be significantly less than those incurred when using physical currency.
The introduction of a national cryptocurrency would also be a boon for the ruling Communist Party of China (CPC). Firstly, Xi Jinping’s agenda of clamping down on corruption would be helped along as transactions would be more traceable, secondly, real-time economic insights could be extrapolated from the data. This would be very important to the CPC which could use the data when laying out its Five-Year Plans and making other laws.