Founding managing partner of HCM Capital, the private equity arm of electronics manufacturer Foxconn, Jack Lee, says China’s Central Bank Digital Currency (CBDC) is ready and expects it to launch in two to three months.
During an interview with CNBC published on Nov. 11, Lee also suggested that the People’s Bank of China (PBoC) will use the new currency to further strengthen its oversight over capital flows.
China’s digital currency is ready
He explained that the PBoC already tracks cash movements with serial numbers on banknotes and blockchain could provide an even more effective way to do it. Lee also noted that China developed its “Digital Currency Electronic Payment” system, a hybrid CBDC that makes use of the already existing payment and banking infrastructure.
“So, they already have all the system and the network ready. I think you will see it very soon, in the next maybe two to three months,” Lee told CNBC’s Tanvir Gill at the Singapore FinTech Festival on Monday.
Interestingly, PBoC announced in late September — contradicting earlier statements — that China’s digital currency had no launch date so far.
Pressure on governments to launch CBDC?
Meanwhile, Swiss state secretary for international finance Daniela Stoffel said that China’s CBDC is not surprising during another interview with CNBC, published on Nov. 11. When asked whether China’s digital currency puts pressure on other countries to follow suit, she also said that: “The pressure has been on for a while. […] Other governments now realize this is now actually really happening and that the questions and challenges that are implied in an e-currency are now real. I hope this will lend further momentum to decisions on a global basis.”
Stoffel added that blockchain has its issues and that all the money laundering concerns need to be addressed. Lastly, she also expressed the idea that regulators should collaborate with startups to help them understand what can and cannot be done.
The Standing Committee of the 13th National People’s Congress in China has passed a law regulating cryptography that will take effect on Jan. 1, 2020, possibly paving the way for its own CBDC.
China is not the only country that has looked at issuing digital currencies. In Switzerland, the Swiss National Bank said last month it’s working with the country’s stock exchange to examine the possible use of such currencies in trading.