During remarks at the China Finance 40 Forum, People’s Bank of China (PBoC) Payment and Settlement Division deputy director Mu Changchun claimed that the “People’s Bank digital currency can now be said to be ready.” The PBoC has been researching options for a central bank digital currency since 2014, Shanghai Securities News reported Saturday.
The report suggests that the central bank opted to avoid a single-tier “pure blockchain” architecture due to concerns that it wouldn’t be able to meet the high concurrency needs of the retail marketplace. Instead, the bank decided to use a two-tier operating system that it sees as more suitable for China’s complex economy, geographic size, and huge population.
The central bank apparently believes that the two-tier system will enable it to partner with commercial banks to better manage the adoption process, decentralize risk, avoid financial disintermediation, and harness the technological prowess, resources, and talents of the commercial sector.
The deputy director described the two-tier system, noting:
“The People’s Bank of China is the upper level and the commercial banks are the second level. This dual delivery system is suitable for our national conditions. It can use existing resources to mobilize the enthusiasm of commercial banks and smoothly improve the acceptance of digital currency.”
The PBoC expects that any issued digital currency will have both “high scalability and high concurrent performance” that can meet the retail sector’s needs. In addition, the plan is for current AML, CTF, and cash regulations to apply to the central bank digital currency.
There was no word on whether the People’s Bank has set a timetable for launching its digital currency.