On January 10, the People’s Bank of China (PBoC) announced the latest update on its central bank digital currency (CBDC) via a dedicated article. As recounted by local news outlet Sina, the central bank has already completed the superior design of the highly-anticipated digital yuan. Furthermore, the planned CBDC had undergone joint testing as well.
Aside from accomplishing the primary goals of the project, the central bank highlighted other valuable aspects of the development. Notably, the PBoC’s dedicated task force conducted years of research which ultimately allowed them to develop appropriate standards. Meanwhile, works dedicated to improving the financial industry’s cybersecurity, as well as the formulation of rules for the recognition of critical information infrastructure, are still ongoing, PBoC said.
The soft launch of digital yuan
News about the plans of conducting the first real-world test of the Chinese CBDC first broke out last December. As reported by local news outlets, the PBoC “intends” to launch the test in two major cities, Shenzhen and Suzhou.
The soft launch will see the application of digital yuan, dubbed digital currency electronic payment (DCEP), in real-world situations such as education, healthcare, and transportation. Partner banks are given the option to design their respective scenarios for the trial. As per the report, if everything goes well, the PBoC would set a definite date for the full launch.
The dedicated article was released a few days after the central bank announced that the development of its CBDC is progressing smoothly. However, it’s worth noting that the efforts of China, as well as the developments, had only been publicized after the unveiling of Facebook’s Libra.
According to Chinese officials, the soon-to-be-released digital currency would entail some similarities with the controversial stablecoin. However, the government refused to spell out other technical details. Meanwhile, a PBoC official reportedly said that the digital yuan is primarily designed to replace the paper version of the Chinese yuan totally.
Other significant preparations
In anticipation of the launch, the Chinese government had enacted a new law that would govern cryptographic password management. The main goal is to set guidelines for the management of passwords and application of cryptography. Sale Lilly, a Blockchain analyst at the Rand Corporation, emphasized that the new law is highly relevant to all the efforts and responsibilities required in issuing a central bank digital currency.
[…] On January 24, Reuters reported that around 70 lawmakers from Japan’s Democratic Party had joined together to push for the creation and issuance of digital yen. As emphasized in the report, the joint effort is the government’s response to the forthcoming digital yuan. […]