A few days ago, the Chinese government announced the creation of its own cryptocurrency, and little information was known about it. Now, a research report published yesterday by crypto exchange platform Binance provides more details about the currency.
According to the report, central bank digital currency (CBDC) of the People’s Bank of China (PBOC) will have a 1: 1 support, and will follow a structured two-tier system with the bank, commercial banking and retail market. Also, it will replace banknotes and coins in circulation.
The two tiers of the system will be the following:
The first tier will connect the PBPC with commercial banks for the issuance and redemption of currencies.
The second tier will connect commercial banks with retail trade.
However, Binance states that there’s not published a technical roadmap for the implementation of this cryptocurrency. On the other hand, affirms that the PBOC system will allow fund transfers without requiring a bank account.
The report issued by Binance also points out that the CBDC aims to show a high turnover rate, comparable with cash rate, while achieving manageable anonymity. Besides, the two-tier system would allow the PBOC to process up to 300,000 transactions per second, which is currently not possible with blockchain technology.
As stated before, one of the purposes of this cryptocurrency is to replace banknotes and coins that circulate in China. This means that the CBDC will not replace the existing funds within the banking institutions, but only the money “on the street”, in a manner of speaking.
According to Binance, this replacement would be a practical solution for some transactions such as retail payments, interbank clearing and cross-border payments.