Central banks around the world are cutting interest rates to zero and are actively tackling the economic recession caused by the coronavirus pandemic. The Chinese central bank, on the other hand, is stepping up its central bank digital currency project (CBDC).
According to a March 24 report from the Global Times, China is about to issue a CBDC. The Bank of China has completed the development of the basic functions of the official digital currency and is currently working on bills for its implementation.
The Global Times has also named a number of private companies in Shenzhen that have contributed to the development of the digital currency. These companies include Alibaba, Tencent, Huawei and China Merchants Bank.
Cao Yan, chief executive of the Digital Renaissance Foundation, told the news agency that these private companies had been selected based on their rich experience with blockchain and third-party payments.
China: Efficient use of sophisticated mobile payment companies
Alipay of Alibaba and WeChat Pay of Tencent together have more than 1.7 billion active accounts in China. It is 300 million more than there are citizens in the country. They combined social media, e-commerce and payments and created an advanced online business infrastructure.
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Alipay is said to have filed five patents related to China’s official digital currency between January 21 and March 17.
Patents cover several areas of digital currency. These included issuing, recording transactions, digital wallets, supporting anonymous trading, and assisting in the control and processing of illegal accounts, as reported by industry media.
China’s long-term goal: a step ahead in international economic development
Cao believes that accelerating the development of CBDCs can help turn a crisis into an opportunity. Cryptocurrency is considered to be the most suitable tool for implementing a central bank’s zero and negative interest rate policies in commercial banks. He added:
“If China is considering the last option to lower the interest rate negatively and target such a policy on commercial loans and borrowings, then a digital currency could do it rather than a zero interest rate.”
Cointelegraph previously reported that China plans to launch a digital yuan in the countries involved in its Belt and Road initiative. China sees its CBDC as an important strategy to give the Chinese RMB a head start in international economic development.
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