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Chinese Think Tank Executive Says CBDC Renminbi Will be First and Replace SWIFT

Saad Ullah

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China’s Centrally Backed Digital Currency (CBDC) Renminbi will not only the be first in the world, but will also potentially replace the global interbank connecting system, SWIFT.

Moving SWIFTly

Chinese news outlet Pandaily has said that Huang Qifan, the Vice Chairman of China Center for International Economic Exchanges (CCIEE), firmly believes that China will be first in the world to launch a CBDC. His opinion came during the Inaugural Bund Financial Summit 2019, held in Shanghai. In his speech, the Vice President expressed his reservations on its financial rival United States’ SWIFT and CHIPS, two financial systems that are used world wide by banks and other financial institutions to operate cross border payments. The Chinese Renminbi currently depends on both the systems. He said that the networks were not only a hindrance in case of United States’ sanctions (a tool frequently used by the Western giant) but also technologically limited for the modern world,

“SWIFT is an outdated, inefficient and costly payment system. Since the establishment of SWIFT 46 years ago, the technology has been updated slowly and the efficiency has been relatively low.”

Digital Renminbi

The Chinese government is one of many that had announced the development of its own CBDC. It had claimed in the past that it was ready in August, but then later on different statements started coming from officials and currently it does not have a set date on the launch. The Standing Committee of the National People’s Congress in China has just launched a new law that regulates the use of cryptocurrencies in commercial aspects in the largest market of the world. The law will come into effect on 1st of January, 2020.

Critics of the move say that the digital Renminbi does not possess the characteristics of being a cryptocurrency. The CBDC is expected to have a two level currency system with one depending on the other.

Bitcoin, the largest cryptocurrency by market capitalization, has been previously declared by courts in China as a property, carrying the same security and ownership laws as any other movable property.

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