China Moves Closer to Issuing its Digital Currency in the Face of Coronavirus: Report
- Alibaba, the company involved in the development of China's digital currency filed for a patent related to the digital currency
- The news came hot on the heels of new coronavirus bill in Congress proposing a digital dollar
The People's Bank of China is getting nearer to releasing its digital currency, reports The Global Times.
According to the latest report, China’s central bank in collaboration with private companies has completed the development of the basic function of the autonomous digital currency and is now drafting laws for its circulation.
Alibaba's financial arm, Alipay, has made public 5 patents pertinent to China’s digital currency from 1/21 to 3/17.
The patents address digital wallets, issuance, transaction recording, and anti-money laundering aspects of the digital currency.
The next step in this process is working with financial services and regulators of insurance as well as passing legislation that could be lengthy and as such no exact date has been set for the launch.
Coronavirus Pandemic Pushing for the Need of Digital Currency
This report came close on the heels of the US considering creating a digital dollar to save the US economy from the impact of the coronavirus pandemic. The virtual greenback could be used to send payments of $1,000 for minors and $2,000 to legal adults.
Both the draft bills “Take Responsibility for Workers and Families Act” and the “Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act,” suggest the creation of a digital dollar.
Step 1: Introduce digital dollar to ship stimulus payments.
Step 2: Hundreds of millions of Americans get their first digital wallet.
Step 3: Trillions of stimulus leads to..well..you know.
— Nathaniel Whittemore (@nlw) March 23, 2020
Digital currency is seen as the “most convenient tool” to translate central banks' zero and negative interest policy to commercial banks.
Citing the industry insiders, the Global Times also reported China should accelerate the availability of its digital currency as interest rates are driven into negative territory around the world to improve liquidity in the market amidst the coronavirus pandemic.
According to Cao Yan, vice director of the Advanced Research Institute of Blockchain, the central bank should accelerate the launch of its CBDC due to the Covid-19 global pandemic. Cao said,
“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that.”
He believes the development of the digital currency would be more efficient if the bank works with private institutions that are involved with blockchain technology and 3rd party payment processes.