According to the Wall Street Journal, the People’s Bank of China has launched the first central bank digital currency, although it does not give any indication of its volume or pace of introduction, and it’s not clear whether the Journal has any correspondents in China now. The Journal’s idea of the reasons for it, begin with evading the dollar system: “The digital yuan could give those the U.S. seeks to penalize a way to exchange money without U.S. knowledge. Exchanges wouldn’t need to use SWIFT, the messaging network that is used in money transfers between commercial banks and that can be monitored by the U.S. government.” They overlook the obvious fact that the SWIFT system set up a joint venture with the PBOC for the purpose of introduction of this currency. Their next guess is that the whole purpose is surveillance of every transaction by Chinese citizens and institutions. But again, there is no indication that cash is being done away with.
Finally, though, the Journal does hit on a unique feature: The digital currency can be issued with an expiration date. “The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.”
There is apparently one major difference between this digital yuan and the central bank digital currencies being planned at the Bank for International Settlements and its seven central bank partners. Digital yuan accounts will be set up for customers at the major Chinese commercial banks, and will be liabilities of those commercial banks, not of the PBOC. This means the holders of these “digital wallets” cannot transfer them to become accounts at the PBOC. Digital currencies which are liabilities of central banks will clearly lead to the shriveling of commercial banks as the central banks become “deposit monopolists” – this is acknowledged by central bankers and bank analysts. https://www.wsj.com/articles/china-creates-its-own-digital-currency-a-first-for-major-economy-11617634118
