The Chinese central bank has revealed that it is working on the development of its own digital currency as part of efforts to improve the speed and convenience of the country’s retail payments system.
People’s Bank of China governor Zhou Xiaochuan said that the Chinese central bank has established a research institute for the development of Digital Currency Electronic Payment (DC/EP) after conducting a seminar on the topic over three years ago.
According to Zhou China’s State Council has given official approval to PBOC’s digital currency R&D project.
Zhou made the remarks at a press conference held in Beijing on 9 March as part of the meeting of China’s two legislative assemblies.
“Perhaps everyone is aware that over three years ago the People’s Bank of China arranged for a seminar in relation to digital currencies, and then subsequently established the central bank’s digital currency research institute.
“The latest move is to arrange for distributed R&D with industry, and cooperate with the market to research and develop a digital currency.
“The concept of a digital currency in people’s minds will differ, and the name of the digital currency that the central bank is researching and developing is ‘DC/EP,’ with DC referring to digital currency and EP to electronic payment.
“Why do we want to link these two [concepts] together? I firstly would like to confirm one goal, being that research into digital currencies isn’t to make currency fulfil the application of a particular technical plan, but to instead pursue convenience, speed and cost-reduction in the retail payments system.
“At the same time we must consider security and privacy, and these matters can make use of digital currencies that employ blockchains as their foundation or distributed ledger technology, as well as technology that has evolved on the foundation of existing electronic payments.
“During this general process we must focus upon overall financial stability and risk prevention, while at the same time the use of digital currency as money must guarantee the transmission mechanisms of monetary policy and financial stability policy as well as protect consumers.
“Some technological plans involve excess risk, and should problems arise they could cause losses to consumers. Particularly when it comes to the economies of large countries, we must avoid these substantive losses that are difficult to compensate, and must exercise more caution.
“During this process we must pass full testing and regional testing, and promote [the technology] once reliability is established.
“In 2017 the People’s Bank of China organised a digital currency and electronics payment project, and following official approval by the State Council, we are currently arranging for everything to proceed.
“We believe that greater caution is required with respect to virtual asset transactions, and from China’s perspective virtual asset transactions do not satisfy the need for our financial products and financial services to serve the real economy.
“Consequently, during this overall process, we don’t need to be too hasty, and will steadily conduct R&D and engage in the orderly implementation of testing.”