Thursday, March 26, 2020

###China Moves a Step Closer Towards Issuing Its Own Digital Currency



                        

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The Chinese central bank completed the technological development aspect of its digital currency, moving a step further towards reality.



Amid the Coronavirus pandemic, as countries seek to aggressively tackle the economic slowdown, China has used this crisis as an opportunity to move a step closer to its Central Bank Digital Currency (CBDC). According to a report by Global Times on 24 March, the People’s Bank of China (PBC) completed the development of the basic functions of the digital currency, and is now paving its way towards drafting and formulation of relevant laws to facilitate implementation.




According to the report, this has been done by liaising with various Chinese payment giants such as Alibaba, Tencent, Huawei, and China Merchants Bank. Alibaba’s payments platform Alipay has publicized five patents in relation to China’s digital currency. The patents cover various aspects of digital currencies including issuance, transaction recording, digital wallets, anonymous trading support and assistance in supervising and dealing with illegal accounts, industry media reported.



Cao Yan, managing director of Digital Renaissance Foundation believes that the involvement of private institutions is detrimental for more efficient development considering their rich experience in blockchain technology. Cao added that cryptocurrency plays a convenient role in translating a central bank’s zero and negative interest rate policy into commercial banks.



“If there is a chance China is considering lowering its interest rate into negative territory as an final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that,” he said.



Although China has completed the technological development step, the next step, which is the legal aspect involving regulations and supervision, will be a lengthier process



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