China's central cryptocurrency replaces cash

A new research report from the Binance exchange says that China’s state cryptocurrency will be a two-tier system that replaces notes and coins in circulation.

The report claims that the cryptocurrency of the People’s Bank of China (NBK) will be tied to the renminbi in a 1: 1 ratio. State cryptocurrency will operate on a two-tier system with a bank, commercial banks and other market participants.

The first level will connect the NBK with commercial banks for the issuance and redemption of currency. The second tier will connect commercial banks to the larger retail market. As Binance notes, the project’s technological roadmap has not yet been published.

Binance claims that the NBK system can make transfers available without having to open a bank account. A two-tier system can allow the NSC to process up to 300,000 transactions per second, which is currently not possible.

“The ultimate goal of state cryptocurrency is to achieve a level of turnover similar to cash, while achieving“ managed anonymity ”. In other words, it is expected that institutions with real names will be registered at the first level of the network, while translations at the second level will be anonymous from the point of view of users. ”

In accordance with the taxonomy of funds of the Bank for International Settlements, the new digital currency of the NBK may be public funds and digital tokens of the Central Bank, which, in turn, have their own categories of general purpose and wholesale categories.

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According to Binance, the NBK cryptocurrency is intended to replace the circulation of Chinese banknotes and coins. In other words, the state cryptocurrency is not intended to replace funds inside the Central Bank or institutions holding cash reserves.

This week, The Global Times announced that the Central Bank of China has denied reports of its plans to issue a state-owned cryptocurrency in November this year. Earlier, deputy director of the payment and settlement solutions department of the Central Bank of China, Mu Changchun, said that work on the prototype of the digital currency of the Central Bank has been completed.