Published: Fri, August 30, 2019
Markets | By Otis Pena

Alibaba and Tencent Among the First to Receive China's Digital Currency

Alibaba and Tencent Among the First to Receive China's Digital Currency

The technology behind the cryptocurrency - dubbed DC/EP (Digital Currency/Electronic Payments) - has been ready since 2018 and it could launch as soon as 11 November, China's busiest shopping day, known as Singles Day. Paul Schulte, who previously served as President of the Construction Bank of China and worked on China's cryptocurrency project, said he did not want to name the first institutions, Forbes reported on August 27th.

According to sources, the People's Bank of China is giving its first round of central bank digital currency (CBDC) to online retail giant Alibaba, Internet giant Tencent, five banking organizations and one unknown entity.

Further, reports say that since previous year the technology for the crypto is ready and that the launch of the crypto is to be expected soon.

China plans to make the cryptocurrency global, but it's still unclear whether any other country would be willing to use the cryptocurrency for transactions in their country.

The yuan resumed its decline against the dollar on Friday and was on track for its worst month since China's currency reform in 1994, due to trade tensions with the United States and a slowdown in the domestic economy. These include commercial banks, business and individuals, as well as the People's Bank of China itself.

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The US Treasury yield curve continues to show inversion, with the 3m/30y, 3m/10y and the 2y/10y all inverted at the moment. HK/SIN, down slightly from Tuesday's session where it gained significantly, but still remaining near Tuesday's peaks.

The institutions would then be responsible for aiding in the dissemination of the digital currency to China's 1.3 billion Chinese citizens.

The designation of China as a currency manipulator was seen as largely symbolic since the potential penalties are less punitive than steps Trump has already taken against China.

The documentation also suggests that China's digital currency will be "a vast network which consists of both software and hardware", said the spokesperson. Facebook also revealed it would rely on a few major companies such as Mastercard, Vodafone and Uber to distribute Libra. "This dual delivery system is suitable for our national conditions", said Mu. The system will reportedly be able to handle up to 300,000 transactions per second, a staggering amount. "It cannot only use existing resources to mobilize the enthusiasm of commercial banks but also smoothly improve the acceptance of the digital currency". In addition, like other permissioned blockchains, the DC/EP is centrally managed by the central bank, which means that the digital currency remains a liability of the bank and the debtor/creditor relationship is unchanged.

The PBOC, the country's central bank, would also encourage merger talks, instead of bankruptcies, when dealing with problematic financial institutions, the report added.

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