China Completes Testing of Framework for Digital Currency, Preps for Roll-out

December 30, 2019

[Music] hello folks you have reached the cryptocurrency portal and today we’re going to go over little information about China the country of China how they’re embracing blockchain and digital currency far ahead of what the United States is doing we recently did a video about some laws that are trying to be passed and some draft bills that are going for the Congress to the United States however those probably won’t be touched until deep in 2020 and we’re in an election year in the United States in terms of presidential year as well and less gets done to her presidential election year so China looks like is getting ahead of the United States and the United States isn’t careful they’re going to be left behind so again the United States needs regulatory clarity in the crypto space so let’s go through this together and just kind of review what China is doing here it says China completes the testing of framework for digital currency and preps for rollout they’re prepping for a rollout China is gearing up to release its central bank digital currency CB DC as it moves into the next phase of the project South China Morning Post which we’re gonna actually go to their website as well reports that the head researcher at the People’s Bank of China has unveiled more details on how the country aims to become a cashless society Liu Chang Chun confirmed on Saturday that China’s upcoming digital will be the digital form of yuan and there will be no speculation on its value the currency is not for speculation it is different to Bitcoin or stable tokens which can be used for speculation or require the support of a basket of currencies although the central bank has not announced a release date for its digital currency China has reportedly expedited the initiative due to Facebook’s upcoming Libra project which has the potential to capture a first mover advantage along with billions of mainstream users we said this in a video earlier this week it’s like no matter where you fall on the spectrum for or against Facebook or their proposed Libra project Libra coin I know there’s been consternation and pushback when they announced it and and there were some congressional hearings in the United States and you saw this information online and Twitter but what they did do is get people talking about it and off their Duff’s because even if there’s pushback they realize that billions of people are under their platform and they better get going they as in other projects and countries the better get going on their projects or Facebook you know in the coming years could leave them behind because once you turn on billions of customers whether it be next year or the following year you’re gonna have that first mover advantage according to the central bank official testing of China’s digital currency electronic payment project is complete along with top-level design formulation and five years of research the next phase is to begin pilot programs in advance of the digital currencies official launch China has been pushing to overhaul the financial services industry implementing new policies too that promote mobile and digital technology particularly to rural areas according to the report issued by the People’s Bank of China in January rural financial services continued to improve in the full coverage of the township financial institutions networks has been basically achieved and digital inclusive finance has been effectively popularized in rural areas the role payments service environment has continued to improve and bank cards of help farmers would draw money to achieve sustainable development and emerging payment methods such as mobile payment have gained popularity in rural areas as the world’s second largest economy prepares to launch a digital you wan to strengthen its position the digital economy top officials the United States are waiting on the sidelines I mean think about that folks they’re waiting on the sidelines they need to move quicker I know they’re being deliberate and analyzing it but you know this could be paralysis through analysis if they don’t do some movement through all their analysis or be simply paralysis and despite revelations that central bankers around the world are pursuing the new technology and despite recent reports that physical US dollars seem to be vanishing without a trace US Treasury secretary Steve minuchin and Federal Reserve Chairman Jerome Powell say there’s no need for a digital US dollar interesting so that’s the latest you can see China is moving forward interesting way to end that article about how Steven minuchin and Jerome Powell the chairman of the Federal Reserve and the Treasury secretary and their stance on the United States so let’s go to actually the South China Morning Post it’s kind of the same thing so we’ll go through this together but this is directly from them so it says mu Qing Chun Central Bank official in charge of plan for virtual yuan also reveals that will not need the backing of the basket of currencies and he did mention Facebook’s cryptocurrency project Libre which is scheduled to be launched next year and were backed by a basket of underlying assets so we kind of went through all this but here’s a little deeper information the Chinese central bank official in charge of a new sovereign digital currency said it would not be open to speculation like other crypto currencies shedding some light on a plan that is still largely shrouded in secrecy mu Qing Chun head of People’s Bank of China’s digital currency Research Institute on Saturday said it would be a digital form of the yuan there would be no speculation on its value and it would not need the backing of a basket of currencies according to the official Shanghai security news the currency is not for speculation it is different to Bitcoin or stable tokens which can be used for speculation or require the support of the basket of currencies move sent he did not mention Facebook’s cryptocurrency project which is scheduled aunch next year and will be backed by a basket of underlying assets he says and this is kind of a WoW this is already a repeated quote the currency is not for speculation it is different to Bitcoin or stable tokens which can be used for speculation or require the support of a basket of currencies from moon Ching Chung the veteran central bank official said the top level design formulation functional research and testing of the digital currency electronic payment had been completed the next step was to roll out pilot programs before the digital currency was launched according to the report Chinese Internet users were unimpressed with the news there would be no speculating on the virtual currency there’s an acute quote so there’ll be no fun in it one person commented on the news portal sign accom another said the digital currency is just another form of you on but cryptocurrencies that use real blockchain technology can be treated like gold and silver on the social network Weibo the response was similar if you don’t allow me to speculate on the digital form of the yuan I’ll speculate on other things like foreign exchange there’s been intense discussion of China’s digital currency since Facebook announced its plan for Libra while the central bank sees the need for a digital version of the yuan in the Internet era it also sees any digital currency or payment services that are out of its control as a potential threat to the country’s financial security which is really just control Beijing has tracked down on trading a Bitcoin and other digital tokens and Facebook’s Libra is views it as a potential challenge to its capital account control meanwhile there’s still no timeframe for introducing China’s digital currency Forbes reported in August citing an unidentified source that Beijing’s cryptocurrency could be launched as soon as November 11th or the singles day shopping festival obviously that didn’t happen no Chinese bank or company has officially confirmed it is taking part in Beijing’s digital currency plan in the Central Bank has yet to disclose those details but Chinese magazine kazeem reported earlier this month that the big four state banks and three state-owned telecom companies were involved in the process whether Chinese merchants and individuals embrace the new digital currency is an open question electronic payment services are widely available across the country through companies like Ali pay and WeChat paid Ali pay is a service provided by Alibaba which owns the South China Morning Post so let’s keep going because there was another article right after this that’s kind of in turn you as well where it says China’s FinTech in industry needs regulation to avoid risk buildup central bank says so again regulation regulation regulation we need regulation the space no matter where it comes from so here it says since China’s central bank again has warned the country must avoid building up risks in the technology driven development of its domestic financial sector given the headwinds of a slowing economy and the continued trade war with the United States so it does seem like it’s calming down now I think they’ve come to somewhere along term resolutions we’ll see how that comes out in the coming months pangong xin deputy governor of the People’s Bank of China PBOC said on Tuesday that financial technology FinTech should be regulated in accordance with the law and in line with policy and issues intended to prevent financial risks according to local media the interests of investors and low-risk products should be protected as should citizens wallets pom is reported to have told the China internet finance forum it isn’t he nice goes on to quote it is necessary to prevent financial technology from being used as a disguise and result in unproductive nacinda upon said financial activities that interact with the public even in the name of technology should be strictly regulated in his court and that’s its quote here Kuan stressed that the new technologies would help improve the quality and efficiency of the financial sector so that support would be provided to firms to accept ecommerce finance platforms and supply chains enriching the financial product system technology driven financial activity should serve people and the real economy he said we should use technologies to encourage the lower and financial cost to help solve the financing difficulties of small and micro enterprises to win the battle of poverty alleviation and to support the implementation of rule of revitalization strategies that is near and dear to my heart in terms of winning the battle of poverty alleviation if they if people in these rural areas and poor areas have access to capital some of them can just bring themselves up and lift themselves up out of poverty so we need to do whatever we can to help people that are living in those areas and have less access to capital by using technology regulators ability to supervise the financial sector should be more effective including across markets across industries and across regions and the quote is we have paid a huge price and learned a profound lesson from the expansion of an exposure to online financial risks that resulted in the current cleanup he said is worth serious reflection and review so that’s their quote here China’s current economic downturn which started in early 2018 and lasted throughout 2019 has been due in no small part to China’s multi-year campaign to crack down on excess debt and risky lending especially in the shadow banking sector the us-china trade war has added to that downward pressure in response to a rapidly rising debt in the corporate sector and ballooning local government borrowing the Chinese government started a deleveraging campaign in late 2016 by strengthening regulations in the shadow banking sector made up of unregulated financial activities the government clamped down hit small and medium sized enterprises not SMEs especially hard and they were live heavily on shadow banks to meet their financing needs even though PBOC took incremental easy measures in its monetary policy to support growth this year the liquidity environment has not improved from many of this SMEs due to the government crackdown Chinese total debt amount to 268 trillion yuan which is 38.3 trillion in u.s. dollars at the end of the second quarter of the of this year equivalent to two hundred and eighty seven percent of Chinese gross domestic product GDP a similar level to that the third quarter of 2017 according to estimates by this wealth management firm the debt to GDP ratio of the non-financial corporate sector declined to one hundred and forty three percent of the GDP in the second quarter from a peak of 148 percent in the second quarter of 2016 now the question for many Chinese companies now is whether the government has finished its deleveraging campaign and will loosen restrictions on the shadow banking sector to ease financing conditions to help support growth one of the fastest fastest-growing segments of the shadow banking industry was peer-to-peer lending which was also a main target of the government’s deleveraging campaign it was initially hoped that p2p platforms would help address the stubborn fundraising problems faced by consumers and small firms due to their lack of access to credit following reforms of the state dominated financial system but many platforms were found to be fraudulent while others had difficulty collecting loan payments to repay their investors zhu bow once China’s biggest p2p lending platform folded in 2016 having collected fifty nine point eight billion yuan which is equivalent to eight point five billion United States Dollars for more than nine hundred thousand investors the resulting public uproar posed a severe challenge to the nation’s social stability last month China created a specially designed task force aimed at eliminating risks associated with peer-to-peer online lending platforms while the government has vowed a thorough revamping of the controversial lending platforms as part of its continuing battle against financial risk has been warned to avoid making the same mistakes again so we just want to go over this here on the cryptocurrency portal because it’s about China and China seems to be forward thinking and they’re already moving forward on the blockchain and cryptocurrency front and obviously developing their own CB DC and that was good to go over that first article then you can see what China is dealing with internally and how they’re going about this it’s good you know that we even though we’ve talked about the United States a lot it’s good to reflect on what other countries doing what they’re doing and how they’re overcoming those issues because it’s important to reflect on that because the United States again needs to get their act together so again thank you for turning into the cryptocurrency portal I deeply appreciate it hopefully you enjoyed this video if you did enjoy this video hey give us a smash that thumbs up button we really appreciate it really helps out the channel and if you’re already subscribed to our channel we deeply appreciate it and if you’re not a subscriber yet hopefully we’ve earned your trust and we’d be honored your subscription to the channel and please leave a comment in the comment section below so we can have a discussion here in the community about cryptocurrency what you think of this video what you think China is doing in their central bank and how they’re gonna have their own CBD see and what the United States should be doing in terms of regulatory clarity in this space so thanks again for tuning in to the cryptocurrency portal [Music]

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    If you like this vide, check out our playlist of videos related to blockchain and crypto in China:

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  • Reply George Harker December 24, 2019 at 3:03 am

    China is definitely making strides

  • Reply Carl Banks December 24, 2019 at 4:10 am

    Great video!

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  • Reply Jonathan Kinder December 28, 2019 at 5:58 am

    Interesting to see that China is far ahead of the United States 🙁

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