China has taken another step towards the launch of its digital currency.
In fact, according to the local English-language newspaper Global Times, the country’s central bank, People’s Bank of China (PBoC), has completed the development of the digital currency’s basic functions, in collaboration with a number of private companies, and is currently developing an appropriate regulatory framework in order to launch it on the markets.
This is only a rumour, but according to the Global Times, it comes from “industry insiders”.
According to these insiders, the country will even have to make efforts to accelerate the launch of the digital currency in order to cope with the current economic and financial emergencies, such as the global reduction of interest rates to zero, or even into negative territory, and the issuance of liquidity on the markets.
Indeed, this digital currency would be considered the most convenient tool to implement such a monetary policy.
It has also been discovered that, between January 21st and March 17th, 2020, the Chinese financial giant Alipay would have registered five patents on this digital currency, for now known as DCEP.
These patents would be related to:
- token issuance,
- transaction registration,
- commercial support,
- supervision assistance.
Although Alipay has not confirmed this, Global Times nevertheless reports that an anonymous insider has confirmed that these patents relate to the basic functions of a digital currency. If anything, according to the same insider, this would suggest that the first step in the development of DCEP would be “basically completed”.
However, the next step, the regulatory process, could be slower and take longer, particularly with regard to cooperation with banking regulators on AML controls and supervision.
The Deputy Director of the Blockchain Advanced Research Institute at Tsinghua University, Cao Yan, said he believes the PBoC should accelerate the launch of the digital currency to address the emergency.
“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that”.