ACCJ VIRTUAL EVENT
China’s Foray into Digital Currencies and the Global Implications By C Bryan Jones
A
s our lives become increasingly digital, many of us are using e-money. Talk of cryptocurrencies peppers the news, while China’s plans and test runs for a central bank digital currency (CBDC) are garnering attention globally. But what Beijing is creating is not a cryptocurrency, and it raises a number of questions. On October 16, the American Chamber of Commerce in Japan (ACCJ) Alternative Investment Committee welcomed Andrew Work, co-founder and director of the Hong Kongbased not-for-profit free-market think tank The Lion Rock Institute, to explore the topic of CBDCs in a presentation entitled China’s Foray into Digital Currencies and the Global Implications. As the former executive director of the Canadian Chamber of Commerce in Hong Kong and a writer for The Economist and Penton Media, Work is a sought-after expert on business, economics, technology, innovation, and politics concerning Canada, Hong Kong, and greater Asia.
PAY ATTENTION TO CHINA Work began the virtual event with a story about a 2019 visit to Hong Kong by the German Bundestag’s Finance Committee. He was asked to speak to the group, which, at the time, was a bit concerned about Facebook’s plans to introduce its Libra cryptocurrency, and what that could mean for the social media platform’s global influence. “The Chinese and their forthcoming digital currency are what you should have on your radar,” he told them. They took that to heart, and soon the Friedrich Naumann Foundation—a German group dedicated to fos tering dialogue on European politics, democracy, and indi vidual freedom—asked him to write a report on the matter that would be presented to all members of the Bundestag. While China’s CBDC project is getting attention now, it isn’t new. “This has been in the works for quite a long time; since 2014,” Work explained, noting that the People’s Bank of China (PBOC) founded an internal team to start doing research. With cryptocurrencies on the rise, the PBOC decided it needed to determine how it would approach the idea. After a few years of exploration, they formalized the mission and created an institute with seven divisions in 2017. “They are deep into test mode now, and this thing is ready to go,” he said. Tests of the PBOC’s digital currency are now underway in four cities:
Xiong’an Shenzhen ■ Suzhou ■ Chengdu ■ ■
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THE ACCJ JOURNAL
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NOVEMBER 2020
