China outlines its proposed digital currency

SHANGHAI: China’s proposed new digital currency would bear some similarities to Facebook’s Libra coin and would be able to be used across major payment platforms such as WeChat and Alipay, a senior central bank officer says.

Mu Changchun, deputy director of the People’s Bank of China’s payments department, said the development of the coin would help protect the country’s foreign exchange sovereignty as commercial applications of such currencies expanded.

‘‘Why is the central bank still doing such a digital currency today when electronic payment methods are so developed?’’ said Mr Mu, according to a transcript of a lecture he gave last week that was published online.

‘‘It is to protect our monetary sovereignty and legal currency status. We need to plan ahead for a rainy day.’’

He said the tokens would be as safe as central bankissued paper notes and could be used even without an internet connection. They could also be used on Tencent’s WeChat and Alibaba-backed Alipay.

Staterun newspaper Shanghai Securities News reported his comments on Friday.

China’s central bank set up a research team in 2014 to explore launching its own digital currency to cut the costs of circulating traditional paper money and boost policymakers’ control of money supply.

It had said little since but Mr Mu said last month the digital currency was almost ready. US financial magazine Forbes, citing sources, said it could be ready as soon as November 11.

Mr Mu said it would strike a balance between allowing anonymous payments and preventing moneylaundering. It would also bear some similarities to Libra in design but would not be a direct copy. Libra will be backed by a reserve of realworld assets, including bank deposits and shortterm government securities, and held by a network of custodians.

Like other cryptocurrencies, its transactions will be powered and recorded by a blockchain.

Mr Mu said the advantage a central bankissued digital coin had over those issued by WeChat and Alipay was that commercial platforms could go bankrupt. Its ability to be used without internet would also allow transactions to continue in situations where communications have broken down.