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17.09.2020 9 OPINION F acebook's attempt last year to launch its pio- neering coin "Libra" was ill-fated. e original plan was for Libra to be backed by a bas- ket of sovereign currencies, with dollars making up 50 percent of the basket. Not surprisingly, its plans to launch a blockchain-based payment system stirred strong resentment among govern- ments, banks and financial reg- ulators. In Europe, French and German central banks blatant- ly showed their anger against such a seamless system of set- tlement. ey attacked Facebook for its loose management of exten- sive customer databases used for marketing purposes. With- out any doubt, the authorities' biggest fear is the growing in- fluence of this IT behemoth on their monetary hegemony. But Facebook's early attempts have not gone unnoticed or unrewarded. With the global economy racing to embrace digital payments, central banks are looking to the future and investigating how to support innovation while maintaining monetary policy and financial stability as they issue and dis- tribute currency. In fact, 80 percent of central banks surveyed are engaging in some form of Central Bank Digital Currencies (CBDCs) work, and about 40 percent of central banks have progressed from conceptual research to experimenting with form and design. Recently, Mastercard announced a proprietary virtu- al testing environment for cen- tral banks to facilitate the eval- uation of CBDC use in public. e platform enables the sim- ulation of issuance, distribu- tion and exchange of CBDCs between banks, financial ser- vice providers and consumers. Central banks, commercial banks, and tech and advisory firms are being invited to part- ner with Mastercard to assess CBDC tech designs, validate use cases and evaluate interop- erability with existing payment rails available for consumers and businesses today. Welcome to the game - Mas- terCard. is is a leader in op- erating multiple payment trails and convening partners to ensure a level playing field for everyone – from banks to busi- nesses to mobile network op- erators – in order to bring the most people possible into the digital economy. In its glob- al reach for digital payments network, MasterCard wants to harness its expertise to enable the practical, safe and secure development of digital curren- cies. It is actively driving inno- vation with the public sector, banks, fintechs, and advisory firms in the exploration of CB- DCs, working with partners that are aligned to its core val- ues and principles. In reality, one can vouch that CBDCs are designed to be equivalent in value to a nation's paper cur- rency and subject to the same government-backed guaran- tees. In addition to printing money, central banks can issue CBDCs as a digital representation of a country's fiat currency. Having discussed Facebook and Mas- terCard adventures into the arena, let us examine what is the state of play in Asia-nota- bly China. China has in 2017, banned cryptocurrency ex- changes and so-called initial coin offerings amid a broad ef- fort to reduce risk to its finan- cial system and clamp down on so-called shadow banking. ree years ago, digital cur- rencies were branded as an easy platform to move money out of China, potentially adding to capital outflows that would un- dermine the yuan's value. e weather chart in 2020 shows a more relaxed picture. In fact, officials from the People's Bank of China have hinted in recent weeks that the nation is almost ready to launch a digital ver- sion of its currency, the ren- minbi, to replace physical cash for consumer payments. One may question - why is the central bank still ventur- ing in such a digital currency today when its own electronic payment methods are so devel- oped? e answer is that the new platform will vastly en- hance the control of monetary sovereignty and legal currency status in China. It is an under- statement to say that to date electronic payment methods are already ubiquitous in Chi- na. Popular mobile payment apps, handle vast amounts of payments per quarter, are quickly eliminating cash trans- actions. How will the new platform work? Consumers and busi- nesses could download a digital wallet onto their mobile phone and fill it with money from their account at a commercial bank. is is similar to going to an ATM. ey then use that mon- ey - dubbed Digital Currency Electronic Payment, or DCEP - like cash to make and receive payments directly with anyone else who also has a digital wal- let. A late August report from influential Forbes magazine suggested it could go live as ear- ly as November/December. ere are a number of unan- swered questions about how it will work, ranging from wheth- er it will use a blockchain or how private the system will be. Despite the unknown, recent public comments by central bank officials have shed some light on the time line for and motivation behind the project. China's digital currency would "bear some similarities" to Libra (mentioned above), but according to reliable sourc- es, the forthcoming currency would strengthen the Commu- nist People's republic resolve to improve its controls against the proliferation of anonymous payments thereby fighting money laundering. is creates an advantage since the new digital tokens could be used even without an internet connection, a fea- ture that Libra's creators have not promised. is leads us to comment on the origins of a leading coin Bitcoin in Asia. Since 2012, the Hong Kong Bit- coin association has been one of the strongest local commu- nities focused on Bitcoin. It stresses that a golden rule for Bitcoin is that transactions are irreversible and preaches to the faithful that it is not suitable for money laundering. Back to China's potential new venture, one notes how trials have been held this year in a handful of cities and tests have started with some e-wallets and online apps, albeit slowed down due to the Covid-19 pan- demic with its penchant for social distancing. Such Covid 19 restrictions have on the con- trary ushered a new sense of urgency. Unlike cryptocurren- cies such as Bitcoin, dealing in the digital yuan won't have any presumption of anonymity, and its value will be as stable as the physical yuan, which will be circulating around too. Behind China's rush is a desire to man- age technological change on its own terms. Another thing that appears to concern crypto evangelists, are burning ques- tions pertaining to the techni- cal design China will be using for its digital money system. So far - the answer is that we don't know yet, but we might learn soon enough. The resurgence of crypto exuberance George Mangion George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island