China is preparing to become the first country to launch its own digital currency.
China’s central bank has released few details of its Digital Currency Electronic Payment (DCEP) project. Work on the project began five years.
Some observers say the DCEP shows both financial innovation and the government’s desire to increase control over the movement of money.
China’s digital currency has similarities to Facebook’s proposed digital currency Libra and existing cryptocurrencies such as Bitcoin. Like those forms of payment, the Chinese currency will be stored in a digital wallet.
What is somewhat different is that China’s central bank will be able to follow where the money is going and even supervise trading.
Observers say the goal of the project is for China to protect its economy at a time when newer payment systems could permit illegal money flows.
Keyu Jin is a professor at the London School of Economics. She said, “There’s a consensus around the world among central bank governors and governments at large that they want to have control of money and money supply.”
She added that the strong desire for control “is probably more unique to China than anything else.”