China’s Digital Yuan Is One Step Closer To Reality Amid Global Pandemic

Amid global pandemic and economic crises, China leans towards launching its long-awaited national digital currency. This comes following an insider report that the country is one step closer to actualizing its dreams of becoming one of the first nations to adopt a nation cryptocurrency.

According to people familiar with the matter, China’s central bank is one step closer to issuing its official digital currency. It seems the People’s Bank of China (PBC), in collaboration with private companies, has completed the development of the sovereign digital currency’s basic function and is now drafting relevant laws to pave the way for its circulation, industry insiders said.

As more central banks around the world are cutting interest rates to zero or even entering negative territory to release liquidity into the market amid the coronavirus (COVID-19) pandemic, China should accelerate the launch of its digital currency, industry insiders noted. 

Cryptocurrency is seen as the most convenient tool to translate a central bank’s zero and negative interest rate policy to commercial banks. 

Alipay, the financial arm of Chinese tech firm Alibaba, reportedly publicized five patents related to China’s official digital currency from January 21 to March 17. 

The patents cover several areas of digital currency, including issuance, transaction recording, digital wallets, anonymous trading support and assistance in supervising and dealing with illegal accounts, industry media reported.

China’s digital currency has been in the works for at least five years, with the PBoC having started the initiative in 2014. The much-anticipated digital yuan will be first distributed to commercial banks and then users and businesses can register digital wallets with these commercial banks, the PBoC stated recently.

The first cities to pilot digital currency will reportedly be Shenzhen and Suzhou. The PBOC is said to have partnered with seven state-owned commercial banks and telecoms – the Industrial and Commercial Bank of China, Bank of China, China Construction Bank and the Agricultural Bank of China, China Telecom, China Mobile and China Unicom – to roll out the test.