A white paper in the Tsinghua Financial Review says the People’s Bank of China (PBoC), China’s central bank, has created and is trying out its own digital currency,
Eventually the currency may be available alongside the yuan. Certainly the currency came along at the right time from a central bank point of view as it has the ability to swap out paper currency entirely. Central banks are looking at the possibility of doing without a paper currency and a cryptocurrency provides a potential future.
There are problems with cryptocurrencies having to do with its resistance to central bank money issuance. But China has plans to get rid of anonymity. Thus every transaction made using a cryptocurrency will be immediately available.
Basically China is taking a private money and creating a quasi public one out of it. The result may be good for China’s banking establishment but certainly much of what makes cryptocurrencies attractive will be discarded if China does issue its own crypto-money.
And there are other issues. Such money offers peer-to-peer transactions. And that means that China cannot entirely control who transacts with whom. For the forseeable future, China will not be able to control its currency nearly as much as it wants to. No doubt it will keep trying.