December 04, 2019 at 09:30AM

The People’s Bank of China (PBC) is currently piloting its digital yuan which is set to be a country’s first electronic legal currency in the world to launch next year.

In mid-November 2019 the country started the first stage of implementing its digital yaun by choosing its three pilot provinces: Shenzhen, Hebei and Zhejiang. These three areas have a combined population of 261.5 million.

President Xi Jinping wants the digital coin to bolster the yuan’s presence globally

Now the central bank could be entering phase two: issuing a digitised version of national identity cards. A Chinese news report shared by Sino Global Capital CEO Matthew Graham on Twitter and spotted by AMB Crypto suggests this is how the bank is tackling the hurdle of digital identity on the blockchain.

Global cryptocurrency firm Binance saw its CEO Changpeng Zhao reply to Graham’s tweet: “WeChat released the first China National ID in its app. One giant step towards digital identity. Still centralised, but definitely brings us closer to the decentralized possibilities/adoption as well.”

China’s race to launch its digital yuan is driven by its wish to track money flowing through its borders, to reduce cash circulation and perhaps most pertinently, to tackle private companies’ digital currency projects such as Facebook’s Libra.

The country’s president Xi Jinping also seems set on using the digital coin to bolster the yuan’s presence globally, reiterated by Nomura Research Institute’s executive economist Takahide Kiuchi who says China wants “to use the yuan more widely in dealing with partner countries” in its Belt and Road economic bloc initiative, Nikkei Asian Review reports.

Read next: China’s Ant Financial is actively looking for Singapore banking licence

via FinTech Futures

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