While central banks around the world cut interest rates to zero due to the coronavirus epidemic and take serious measures against the recession, the China central bank is accelerating the national digital currency supply process.
According to CoinTelegraph, China is one step closer to issuing a National Digital Currency (CBDC). The country’s central bank has completed the core function of the official digital currency operation and is now developing laws that will help implement it.
Shenzhen-based private companies, including Alibaba, Tencent, Merchants Bank of China and Huawei, have contributed to the development of the digital currency.
Cao Yan, director of the Digital Renaissance Foundation, said in an interview that these private companies were selected because of their valuable experience in the Chinese blockchain and third-party payments.
Payments made by Alibaba’s Alipay and WeChat Pay platforms to Tencent have more than 1.7 billion active accounts across China, while China’s population of 1.4 billion. The two companies have created social and business networks and electronic payments to create advanced online business infrastructure.
Alibaba has reportedly only filed 5 patents related to China’s national Cryptocurrency between January 21 and March 17.
According to media reports active in the digital currency field, these inventions include a variety of transactions including issuance and recording of transactions, digital wallets, anonymous trading support and assistance in monitoring and dealing with illegal accounts.
Cao believes that accelerating China’s national Cryptocurrency program could turn the crisis into an opportunity. Because digital currencies are considered one of the most appropriate tools for applying zero or negative interest rate policies to commercial banks. He added:
If China seeks an opportunity to cut bank interest rates to zero or even negative as a final solution, and wants to apply this policy to commercial lending, a circulating digital currency better than M0 will help achieve that.
The term “M0” or so-called “coinage” refers to coins or banknotes in circulation and other money equivalents that can be easily converted into cash.
China intends to implement digital yuan in countries including the Belt and Road Initiative. China views its national digital currency as an important strategy to enable the renminbi (China’s national Cryptocurrency) to take the lead in international economic development.
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