The stocks of Chinese fintech firms are rallying and outperforming the broader market, as Reuters reports, ahead of the launch of the Chinese national digital currency, despite the fact that the People’s Bank of China (PBOC) recently refuted rumors that the central bank will launch a state-backed digital yuan in November.
The CSI fintech theme index, which tracks major Chinese fintech firms, has gone up more than 50% so far in 2019. Among the noteworthy performers are Beijing Certificate Authority, a provider of electronic authentication services which has soared significantly in 2019, adding 200 percent to its share price, and 360 Security Technology Inc, a network security services provider whose shares gained over 50 percent in 2019.
In August, Mu Changchun, deputy director of PBOC’s payments and settlements department, said that China is “almost ready” to issue its digital yuan. This long-anticipated digital currency will allegedly share certain similarities with Facebook’s Libra coin and its launch is “imminent.'' According to Mu Changchun, the digital currency could be used across major payment platforms like WeChat and Alipay.
Meanwhile, the Governor of the PBOC, Yi Gang, reiterated recently that the central bank has not yet set the date of the digital yuan launch, stressing that regulatory issues must be resolved first:
“If the [sovereign] digital currency involves cross-border use, it will involve a series of regulatory issues regarding anti-money-laundering, anti-terrorism financing, anti-tax evasion as well as know-your-client protocols.”
The PBOC is adamant that the digital currency will not replace the fiat yuan system completely. The new currency will be tightly controlled, and won’t be built on the open-source blockchain entirely. China Daily reports that a “closed-loop” simulation has already begun, which aims to test payment scenarios with “some commercial and non-government institutions.”