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Central Bank Official: Blockchain Application Ideal for Chinese Commercial Banks

Li Wei, the Technology Departmental Head of the People’s Bank of China, has urged Chinese commercial banks to embrace blockchain and digital finance. His sentiments come at a time when decentralized finance (DeFi) has become an emerging trend, whereby decentralized networks are set to transform traditional financial approaches into transparent and trustless protocols.

According to Reuters, Wei shared these sentiments at a Shanghai forum, and he challenged commercial banks to step up their game when it comes to blockchain application. His viewpoint comes at a time when China’s President Xi Jinping has noted that the nation ought to accelerate the development of blockchain technology.

Xi stipulated that the application of blockchain technology has extended to digital finance, internet of things, intelligent manufacturing, supply chain management, digital asset trading, and other fields.

Presently, the establishment of blockchain technology is being accelerated in major nations across the world. China has not been an exemption as it has developed a solid foundation in this technological innovation. Nevertheless, collaborative research is necessitated for blockchain to thrive.

On the other hand, Sun Tianqi, the chief accountant for China’s foreign exchange regulator, has stated that emerging markets ought to take prudent actions against illegitimate cross-border capital flows involving digital currencies. This trend has been instigated by FinTech because of cross-border transactions.

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China’s Central Bank Rolling Out DCEP National Currency, While Saying ‘Libra Won’t Succeed'

China has been reportedly developing its central bank-issued digital currency for a while and is believed to be ready to launch by China’s central bank, People’s Bank of China (PBoC).

Huang Qifan, the Vice Chairman of the China International Economic Exchange Center (CIEE), stated that the PBoC has continued to be committed to becoming the first country in the world to come out with a national digital currency.

Huang confidently emphasized that the digital currency electronic payments system (DCEP) will be ready to be introduced to the financial system soon:

“The significance of Digital Currency Electronic Payment lies in that it’s not the digitization of existing currency, but the replacement of Reserve Money (M0). It greatly reduces the dependence of the trading process on accounts, which is conducive to the circulation and internationalization of the Renminbi.”

Upon review of the 50 patent applications submitted by the PBoC, the DCEP will be powered by a two-tier operating system and would not be running on blockchain.

However, the PBoC also announced that Chinese commercial banks should be embracing blockchain and digital finance earlier this week, adding on President Xi Jinping’s speech on Oct. 24 urging the nation’s acceleration of development of blockchain technology.

Huang also expressed that Facebook’s Libra stablecoin and Bitcoin should not be trusted as they are not government-issued and are vulnerable to instability.

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China’s Central Bank Digital Currency Research Unit Signs Deal with Huawei

The Chinese central bank, People’s Bank of China’s (PBoC) Digital Currency Research Institute, has signed an agreement with multinational telecommunications giant Huawei.

Fan Yifei, the PBoC deputy governor signed the fintech research cooperation agreement between Huawei and PBoC’s Digital Currency Research Institute in Shenzhen at Huawei’s headquarters.

Huawei said that the “strategic cooperation” agreement is for FinTech research. Fan also praised the firm’s achievement in developing distributed databases and computing chips.

Ren Zhengfei, Huawei’s CEO recently publicly stated its support for China on the issuance of a digital currency to rival Facebook’s stablecoin Libra. He said: “China can also issue such currency by itself. Why wait for others to issue it?

The PBoC started its Digital Currency Research Institute in January 2017, focusing on blockchain and FinTech research. Mu Changchun, appointed to head the research said that the design of the national digital currency would be similar to Libra and would be accessible across major payment platforms including WeChat and Alipay.

Huawei has been active in the blockchain space, having revealed its Hyperledger blockchain offering in April of this year. This announcement also appears to be the first publicly announced deal by China’s central bank with a well-known company.

President Xi Jinping also called on his country to accelerate the adoption of blockchain technology recently.

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Stern Warning on Crypto Trading by the China's Central Bank Prompts Bitcoin Bears

Following a cryptocurrency trading clampdown threat by China’s central bank, People’s Bank of China (PBoC), Bitcoin has seen losses of more than 10%. Its value has dropped below $7,000.

This announcement has made other cryptocurrencies, such as Ethereum, to nosedive losing at least 12% of its value.

Through a translation, the bank stated: “Once [cryptocurrency trading] is discovered, it will be disposed of immediately, and it will be prevented from happening early.”

Bitcoin price has been on a downward trend the whole of this month, but things got worse off following this revelation by the People’s Bank of China.

According to a Forbes report, cryptocurrency has not been completely banned in China, but the nation made a stern warning as banks were cautioned against working with Bitcoin exchanges back in 2017.

The Shanghai-based central bank has also made a caution against conflating the nation’s interest in blockchain with crypto and Bitcoin.

The bank noted: “Recently, in the process of promoting blockchain technology, virtual currency speculation has shown signs of rising. Investors should be careful not to mix blockchain technology with virtual currency.”

The crackdown threat made on Nov. 22 shows the way the worldwide crypto markets are likely to move based on statements made from China. For instance, in October, Bitcoin increased by more than $ 2000 following China’s President Xi Jinping callsfor acceleration in blockchain development. He noted that blockchain application had extended to digital asset trading, digital finance, supply chain management, Internet of Things, and other fields.

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China’s Central Bank Partners with Commercial Banks and Telecom Giants to Test Digital Currency in Two Major Cities

New developments of China’s central bank geared towards testing its digital currency electronic payment (DCEP) in the cities of Shenzhen and Suzhou. The People’s Bank of China, the country’s central bank is on track to become the first central bank on the globe to issue a national digital currency. Huang Qifan, the Vice Chairman of the China International Economic Exchange Center (CIEE), stated that the PBoC has continued to be committed to becoming the first country in the world to come out with a national digital currency.

According to Chinese financial news site Caijing, the central bank has partnered with seven state-owned companies to test out the currency on four commercial banks and three telecom giants. The test will aim towards the transportation, education, commerce, and medical industries.

Some of these banks chose to collaborate with telecom giants to develop SIM cards with built-in digital wallets, while other companies wanted to build independent wallet apps.

The first phase of the pilot program in Shenzhen will consist of a small-scaled testing period at the end of this year, while the DCEP will be continually promoted in the city in 2020.

According to Caijing, several commercial bank insiders said, “Previously, the central bank was in no hurry doing this. Recently, all of a sudden, they accelerated.” In light of Facebook pushing out Libra, the central bank seemed to have fast-forwarded its plans to carry out its digital currency ahead of the original schedule.

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Six Central Banks Form Working Group to Assess Central Bank Digital Currencies

Six central banks around the world have come together to create a working group to share experiences on use cases on central bank digital currency (CBDC). With significant expertise in exploring digital currencies, these six central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central bank, Sveriges Riksbank in Sweden, and the Swiss National Bank, along with the Bank for International Settlements (BIS).

Benoît Cœuré, the Head of the BIS Innovation Hub, will be the co-chair of the group along with Jon Cunliffe, the Deputy Governor of the Bank of England and the Chair of the BIS Committee on Payments and Market Infrastructures (CPMI). Cœuré is also the chair of the G7 working group on stablecoins and was previously the CPMI chair.

The announcement explicitly stated that the working group would “assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies.”

Although other Asian central banks, such as the People’s Bank of China, the Monetary Authority of Singapore, with extensive CBDC research experience, have not been included in the group. China’s central bank has been reportedly testing out its CBDC, and Singapore’s central bank has been in the process of its CBDC Project Ubin. The Bank of Thailand has been exploring CBDC as well with its Project Inthanon, with CryptoBLK.

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China's Pursuit of Digital Yuan "Unswerving" in Wake of COVID-19 Global Pandemic, says Central Bank

China’s central bank has further galvanized its public commitment to creating the first central bank digital currency (CBDC), a digital version of the Yuan, at an annual meeting hosted last Friday by the People’s Bank of China (PBoC) vice-governor Yifei Fan.

A summary notice of the 2020 National Currency Gold Silver and Security Work Video and Telephone Conference released on April 4 outlined the People’s Bank of China priorities for the year ahead which reaffirmed its commitment to the digital Yuan which is also being called a Digital Currency Electronic Payment (DCEP).

According to the summary, the PBoC’s continuous improvements to cash systems and securities will be guided by Chinese Leader Xi Jinping’s new era socialism with Chinese characteristics. Per the release, “One is to strengthen the top-level design, unswervingly advance the research and development of legal digital currency, systematically promote the reform of cash issuance and return systems, and accelerate the promotion of banknote processing business, issuance of bank guards and issuance funds.”

This marks the third time that the DCEP has been raised at the annual meeting and the intensity of the language used seems to signal a strengthened commitment by the PBoC.

The DCEP Top-Level Design

So how will China create its digital currency? First of all, we know that the digital currency will not be running on a blockchain. After a review of the 50 patent applications submitted by the PBoC, it will be powered by a two-tier operating system and will not be fully decentralized.

According to Binance, the central bank DCEP will be backed 1:1 by Renminbi fiat, following a two-tiered structured system involving the central bank, commercial banks, and the retail market. The first layer consists of the PBoC issuing and redeeming China’s digital Yuan via commercial banks. The second layer is responsible for connecting the commercial banks with the retail market. The plan is to replace notes and coins in circulation, known as the M0 supply.

China’s central bank mentioned that their digital currency would be issued to seven institutions in the coming months, but that was last September.

Paul Schulte, who worked as the global head of financial strategy for China Construction Bank up until 2012 says that the largest and second-largest banks of the world, Industrial and Commercial Bank of China and Bank of China as well as the Agricultural Bank of China, along with Alibaba, Tencent and Union Pay will be receiving the digital currency first.

COVID Incentives

Although China’s digital Yuan project has been in development for years, given the effect of the coronavirus outbreak and its spreadability through surface contact, there may be added motivation to move beyond physical bank notes. The PBoC previously announced that it would disinfect cash for up to two weeks before absorbing it into their vaults and put around 600 billion of new yuan into circulation on Feb. 15

Researchers at the Bank for International Settlements (BIS) recently released its newest quarterly report on the changes in the payment industry, including the market impact of the recent coronavirus outbreak.

The report highlighted the ways the COVID-19 could be the catalyst to spark mainstream digital payments. Per the report, “The most transformative option for improving payments is a peer-to-peer arrangement that links payers and payees directly and minimizes the number of intermediaries. Many peer-to-peer arrangements use distributed ledger technology (DLT),”

Bitcoin and Libra have also caught the institution’s attention, while the BIS acknowledged that central banks are increasingly exploring the “desirability and feasibility of establishing their own peer-to-peer systems through digital currencies.”

China’s Central Bank Official Urges the Acceleration of Digitization of the Chinese Economy with Blockchain

China’s central bank, the People’s Bank of China (PBoC) Financial Technology Committee held its first meeting of the year this week, after months of delay due to the coronavirus pandemic.

Fan Yifei, the PBoC’s deputy governor echoed President Xi Jinping’s call for the acceleration of the country’s blockchain development adoption. The president pointed out that it is necessary to strengthen fundamental research of blockchain technology and enhance innovation, enabling China to take a leading position in the blockchain field.

The bank’s deputy governor met with the central bank’s officials as well as the heads of their affiliated financial institutions. Fan emphasized the importance of blockchain and financial technology (FinTech) industries and wanted to ensure China’s adoption plan would be laid out and implemented by 2021 to be in line with the deadline they have set out.

As Sina reported, the main takeaway from the meeting was said, “It’s necessary to strengthen the application of regulatory science and technology, actively use big data, artificial intelligence (AI), cloud computing, blockchain, and other technologies to strengthen the construction of digital supervision capabilities.”

New policies were also discussed along with an overview of scientific studies to encourage the development plan, as Fan further stressed the urgency for accelerating the digitization of the Chinese economy.

First-ever blockchain zone in China

The first provincial blockchain zone has been established in China, in the central Chinese province of Hunan. The “Wanbao” blockchain zone is located in the city of Loudi, marking the first blockchain zone in China.

China’s 2019 blockchain zone development report placed the city of Loudi at 17th among domestic blockchain zones. With a total of 788 blockchain enterprises established in Hunan, a few of the industry-leading enterprises include Shareslink, Hyperchain, Incite Data, and Shenzhen Defang Technology.

The province currently plans to build three major blockchain zones, including blockchain industrial parks in Wanbao district in Loudi, and other zones in Jingkai and Gaoxing in the city of Changsha in the Hunan province.

Blockchain and AI for cross-border financing

China is researching the application of blockchain technology and artificial intelligence in cross-border financing, with a focus on risk management.

Lu Lei, the deputy head of the State Administration of Foreign Exchange (SAFE) in China, said that there are plans to use blockchain and AI for cross-border financing after Facebook announced plans for its Libra stablecoin.

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China’s Central Bank to Develop Blockchain-Based Trade Finance Platform for the Greater Bay Area

China’s Central Bank, the People’s Bank of China (PBoC) announced its development plans for outlining a blockchain-based trade finance platform for the so-called Greater Bay Area that links Hong Kong, Guangdong, and Macao.

Governing entities in China, including the PBoC, China Banking Regulatory Commission, China Securities Regulatory Commission, and the Foreign Exchange Bureau came together to issue the official document for the proposal. The entities submitted their suggestions on financing the construction of the Guangdong-Hong Kong-Macao Greater Bay Area, focusing on global trade and finance.

The proposed blockchain-based platform would enable participating banks to securely share cross-border trading information through a reliable source. Blockchain technology was considered, as its decentralized feature that removes the need for third-party intervention when information is traded between members, enabling higher security.

The report also mentioned the support of innovative technologies including blockchain, big data, and artificial intelligence (AI) in the Greater Bay Area. The central bank’s report added that the new financial technology (FinTech) developments would also include facilitating more efficient electronic payments in Renminbi in Mainland China. Non-banking financial institutions will be supported for their expansion plans in Hong Kong and Macao.

PBoC official urges the acceleration of digitization of the Chinese economy with blockchain

China’s central bank, the People’s Bank of China (PBoC) Financial Technology Committee held its first meeting of the year this week, after months of delay due to the coronavirus pandemic.

China Construction Bank’s updates of blockchain platform after $50B transacted

One of China’s four largest banks, China Construction Bank (CCB) has officially released the second version of its blockchain platform for trade finance, reaching 360 billion yuan ($50 billion) in cumulative transaction volume.

CCB announced the release of “BCTrade 2.0,” focusing on digitizing trade and financial services between 54 domestic and overseas CCB branches and 40 external organizations. Reported by Xinhua news, these organizations include state-owned banks and foreign banks.

Starting in 2017, CCB’s project claimed to be the first to use blockchain for domestic letters of credit, forfaiting and international factoring. In March this year, CCB announced that the blockchain was responsible for the 200 billion yuan transacted in 2018 with 40 domestic and financial participants involved.

The platform allows trading and financing activities, including accounts receivable and trade financing. Aiming to provide a regulatory system for trade finance and to enable real-time monitoring of financial activities, the second version of the blockchain was publicly announced after having reached 360 billion yuan in transaction volume. Ji Zhihong, the Vice President of CCB said that the “distributed storage, transaction traceability, and non-tamperability” characteristics of blockchain are highly compatible with trade finance.

China to Build ‘Digital Central Bank’ Infrastructure, Striving to Become the World’s Leader in Digital Currency Development

China’s Central Bank, People’s Bank of China (PBoC) is planning to look into building a digital central bank infrastructure to improve the standards of financial services in the country.

On May 18, the Chinese Central Bank’s 2020 video conference on scientific and technological work was held in Beijing. The meeting focused on the technological achievements made in 2019, an in-depth analysis of the current situation and challenges, and the upcoming key plans for 2020.

The meeting also pointed out the development of the “digital central bank” construction to improve financial services capabilities and strengthening the financial industry network security.

Fan Yifei, PBoC’s deputy governor, and member of the party committee, who recently echoed President Xi Jinping’s call for the acceleration of the country’s blockchain development adoption addressed the meeting.

The meeting emphasized that due to the coronavirus pandemic, the effectiveness of the financial industry’s technological development has been tested, and has exposed some shortcomings and deficiencies. The pandemic highlighted the urgency for financial digital transformation in China.

A three-year FinTech development plan was set out for the country in August 2019, and 2020 has entered its second year. The development of blockchain, internet of things (IoT), big data, and other innovative business models will also be expected to drive the digital transformation of the financial industry and promoting financial technology in the country.

China has also taken an ambitious step to “maintain its leading position in digital currency technology,” as it remains the central bank’s current top focus. According to Zhongtai Securities, the People’s Bank of China expects to be in the world’s leading position in digital currency development, as it continues to strive for efficient research and development, as well as technical testing of digital assets.

Although China makes recognizable efforts in the development of its central bank digital currency (CBDC), also known as digital currency electronic payment (DCEP), it is acknowledged that mass adoption will still take some time. Besides the mass adoption of digital currencies, the country also sees financial technology’s governance as a distant goal.

DCEP has been reportedly close to its launch, but local government employees in the Chinese city of Suzhou will be receiving the digital currency this month, as the country is charging full speed with the development and subsequent launch.

Blockchain-backed stocks in China are sought after by investors

An uptick of blockchain-related stocks in China has been observed in the A-share market in the country. According to a report, the statistics show that 23 of the 31 digital asset-backed concept stocks rose, accounting for around 74 percent. Close to 78 percent of the stocks related to blockchain has also seen a rise.

As China’s central bank digital currency (CBDC), also known as digital currency electronic payment (DCEP) is approaching its official launch, digital asset-backed concept stocks are continually being sought after by investors.

Digital currencies to combat fraud and paper-heavy processes

A local Chinese research report also stated that digital currency could help combat fraud, corruption, money laundering, tax evasion, and terrorist financing. Advantages of digital currencies, such as transparency, efficiency were also noted in the report:

“The benefits that digital currencies may bring to commercial banks, including the promotion of digital currencies and wallets by large banks, and reduce the cost of paper-heavy processes to improve the efficiency of bank operations.”

China has also started disinfecting and isolating used banknotes, aiming to stop the spread of the coronavirus. By using ultraviolet light and high temperatures to disinfect bills, banknotes are sealed and stored for around 14 days before recirculating them to the public. The nation’s central bank made an emergency issuance of the four-billion-yuan worth of new bills for the province of Hubei prior to the Lunar New Year holiday in January.

The potential removal of cash and the birth of the CoronaCoin

The Louvre museum in Paris banned cash at its ticket gate in March of this year in fear that banknotes could possibly be a mode of transmission of the coronavirus. South Korea’s central bank burned banknotes to slow the outbreak, while the US Congress has plans to roll out a digital dollar. The pandemic has been a catalyst for the digitization of money. However, a controversy was born as the cryptocurrency community has seen the emergence of a new coin–a coronavirus-backed token.

Published first on Reddit, the primary purpose of the token is to spread awareness of the health issue across the board. The CoronaCoin (NCOV), will be an ERC-20 token, and the total supply of the token is based on the world population.

With one NCOV token per each person alive globally (7,604,953,650), the token is burnt every 48 hours, according to the number of infections and casualties from the virus.

The token’s website states that a portion of the funds will be donated to Red Cross for “nCov relief,” however, it does not state the precise portion. The crypto community also suggested that Bitcoin would remove the need to quarantine cash.