In pursuit and achieving its digital currency goals, the Chinese central bank has released the digital Yuans’ white paper. It is to note that earlier this month, the country had also begun pilot trials of the digital currency.
The white paper for the People’s Bank of China’s (PBOC) future digital CNY was released today by the Chinese central bank (DCEP). The digital fiat, dubbed e-CNY by the central bank, now has an official English moniker.
China has been at the forefront of CBDC development since its inception in 2014 when it began research and development.
For almost two years, the Chinese central bank has been conducting comprehensive testing for the digital yuan across retail markets through numerous pilot programs, and the release of the white paper could signal the conclusion of the testing phase.
So far, as the top-level design, function development, and system testing has been completed, the PBOC has initiated pilot programs in some representative regions, while making sure the pilots run in a steady, safe, managed, innovative and practical manner.” PBOC said in its official statement.
The national CBDC’s role in the banking system and retail market is described in detail in the e-CNY white paper. The digital yuan would be considered legal tender in China and play a significant role in the retail payment business. It will coexist with the actual RMB and serve as the payment system’s backbone.
The planned national digital sovereign currency would be centralized and based on a two-tier system, with banks serving as the base layer and digital wallets serving as the second tier.
The new digit yuan, according to PBOC, will allow consumers to spend it even if they do not have access to the internet.
In the future, the central bank plans to continue the pilot initiatives in order to make the e-CNY more advanced and intelligent.
The white paper makes no mention of blockchain, implying that it will be centralized. However, Yao Qian, director of the China Securities Regulatory Commission’s Science and Technology Supervision Bureau and previous head of the digital renminbi (DCEP) project, did not rule out the usage of Ethereum or Facebook’s Diem. According to Qian, deploying such blockchains would enable direct issuance.
The white paper revealed new e-CNY would be smart contract programmable and they are testing various use cases. It also revealed that the research committee has already run into some security vulnerabilities with smart contracts that need to be improved.
