It’s understandable to see several central banks around the world cutting down interest rates to zero and to take drastic actions to fight off the economic recession brought by the ongoing coronavirus pandemic. However, China seemingly found a way to turn such crisis into its advantage. The central bank of China utilized the situation to further accelerate the development of its central bank digital currency (CBDC) structure.
As per the recent report of Global Times this March 24, China took a massive step closer to issuance of its CBDC amidst this global crisis. The report states that the Bank of China has successfully completed the development of the fundamental functions of the digital currency and is now currently drafting the laws that will come with its official implementation.
On top of that, Global Times’ report also mentioned several Shenzhen-based private companies that include Tencent, Alibaba, Huawei, and China Merchants Bank to have played a part in the said development of the official digital currency.
Digital Renaissance Foundation’s managing director, Cao Yan, announced to the news agency that the included private companies were exclusively selected based on their significant experience in Blockchain and payments made in third-party.
China prioritized companies that offer advanced mobile payments
Tencent’s WeChat Pay and the Alipay of Alibaba have amassed more than 1.7 million regular users collectively in China alone. To put in perspective, that is 300 million more than the actual population of the country itself. These applications have managed to combine social media, payments, and e-commerce in order to produce an advanced online commercial framework for the whole China to utilize.
It is also worth mentioning that between January 21 and March 17 of this year, Alipay has purportedly publicized five patents that have strong correlation with the official digital currency being developed by China. The said patents cover a number of areas concerning digital currency, that explicitly include transaction recording, issuance, digital wallets, anonymous trading support, and support in the supervision and prevention from illegal accounts.
China’s ultimate goal is to be the frontrunner in the game of international economic development
Cao Yan firmly believes that the acceleration of the country’s CBDC plan has the ability to turn such crisis into its leverage. This is because cryptocurrencies are seen as the ultimate convenience tool in the process of translating a central bank’s negative to zero interest rate policies into commercial banks.
As previously reported by Coinmod last January, China has also been planning the implementation of a digital Yuan.
In summary, China sees its coming CBDC as an integral strategy to provide the Chinese RMB the leverage in the race for international economic development.