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Central Bank Digital Currencies

February 7, 2020 | Article

"Technology is fundamentally disruptive"

Central Bank Digital Currency ("CBDC") is not a well-defined term but can be interpreted as a digital form of central bank money that is different from balances in traditional reserve or settlement accounts. It can be viewed in the form of a Venn-diagram referred to as the money flower (Bech and Garratt, 2017) which has 4 major properties, i.e. issuer, form, accessibility, and technology (see below).   


In China, Wanxiang Blockchain Labs, the harbinger and leader of blockchain technology, is visionary and foresee the coming of CBDC (or it is commonly referred to as digital currency/electronic payment ("DC/EP")) before it is widely known by the public. 


The Chinese DC/EP is a proposed digital legal tender centrally issued by the People's Republic of China ("PBoC") and backed 1-to-1 by its fiat reserves, with manageable anonymity and encryption features.

Through the digitalization of the RMB, the PBoC aims to improve the effectiveness of its monetary policy, while mapping out a more comprehensive picture of all individuals and businesses across China. Further, another key purpose is to increase both the RMB’s turnover rate and its global reach (internationalization).

DC/EP will be a game-changer of our modern financial world. 

Money Flower (2).png



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