A senior official at China's central bank, Mu Changchun, has said that the country's digital currency is "ready."
Mu Changchun who is the Deputy Chief in the Payment and Settlement Division of the People’s Bank of China (PBOC,) made the statement at the China Finance 40 Group meeting on Aug. 10, according to a report by Chinese news outlet, CNStock.
Mu Changchun stated that the CBDC prototype exists and the PBOC's Digital Money Research Group has already fully adopted the blockchain architecture for the currency. China's CBDC will not rely entirely on a pure blockchain architecture, as this would not allow the currency to achieve the throughput required for retail usage.
According to the report, the currency has been in the research and developing since 2014, which Mu Changchun said that "People's Bank digital currency can now be said to be ready."
The CBDC will employ a two-tier operational structure, per Changchun:
"The People’s Bank of China is the upper level and the commercial banks are the second level. This dual delivery system is suitable for our national conditions. It can use existing resources to mobilize the enthusiasm of commercial banks and smoothly improve the acceptance of digital currency."
Giving reasons for adopting the two-tier system two-tier operational structure the report says:
"China is a complex economy with a vast territory and a large population. The economic development, resource endowment, population education, and acceptance of smart terminals are not the same. If a single-tier operating structure is adopted, it means that the People's Bank must face all the public alone. In this case, it will bring great challenges. From the perspective of improving accessibility and increasing public willingness to use, a two-tier operational framework should be adopted to deal with this difficulty."
"The People's Bank of China decided to adopt a two-tier structure, in order to give full play to the resources, talents and technological advantages of commercial organizations, promote innovation, and compete for excellence."
"The two-tier operating system helps to resolve risks and avoid excessive concentration of risks."
"If you use a single-tier operational architecture, it will lead to financial disintermediation"
At the same event, China UnionPay Chairman Shaofu Jun said that the goals of China's CBDC would be difficult to achieve. While a CBDC could solve issues related to cross-border transactions, long lag times and legacy inefficiencies, the lack of clear operational processes and a detailed regulatory framework across countries will be challenging to overcome.