Chinese research on the central bank digital currency (CBDC) project has been delayed since the first quarter of 2020 due to the Coronavirus outbreak. However, officials say Beijing is keen to see the pilot test happen before the end of this year.
The coronavirus outbreak delaying progress on China’s CBDC
Nevertheless, Chinese officials insist:
“However, the launch is likely to go ahead as planned because the central bank has enough technology, resources, and talent to catch up with the process.”
Running the Digital Currency Electronic Payment (DC/EP) test will be done as expected this year. Although central bank officials are still discussing application scenarios under which DC/EP can circulate as fiat.
The Global Times stated:
“The coronavirus outbreak has led to postponed work resumption in government institutions, including the People’s Bank of China (PBOC). Policymakers and research staff involved in the DCEP project are no exception, which weighs on the development process.”
Shentu Qingchun, CEO of Blockchain company BankLedger, also involved in the launch of DC/EP. Therefore, in an interview with the Global Times, he revealed that PBOC is expected to issue an important announcement in the first quarter.
Shentu Qingchun, CEO of Blockchain company BankLedger
Shentu declined to disclose the details but said:
“But there’s only one month left. So it’s very likely that the notice that can be given on time is very fragile.”
China’s CBDC pilot will still launch in 2020
However, PBOC can make a planned launch, industry insiders said. Some people expect to see DC/EP launch by the end of 2020.
Cao Yin, vice director of the Advanced Research Institute of Blockchain under the Yangtze Delta Region Institute of Tsinghua University, said:
“The central bank has been preparing for the launch both technologically and theoretically for a long time. The technological roadmap has been laid out already.”
Besides, the central bank’s digital currency group has enough R&D staff to deal with a small lag in the research process. In January 2020, PBOC outlined its main tasks by 2020, including promoting R&D for the new currency.
So far, PBOC has set up two other research institutes specializing in digital currencies in Shenzhen, Guangdong province of South China and Suzhou, Jiangsu province of China, in addition to its headquarters in Beijing.
The Global Times stated:
“Research on DC/EP has achieved great results.”
Since February 20, the central bank’s research institute has applied for 65 patents related to digital currencies, while PBOC’s printing science and technology institute has applied for 22 patents. Some analysts point out that patents associated with the launch of DC/EP, including issuance, circulation, and recycling, have all been applied for, laying the foundation for future application.
Shentu predicts that due to the advantage of the digital currency in reducing interpersonal hand contact, the outbreak of Coronavirus could give policymakers a reason to pay more attention to the development of DC/EP.
Shentu added:
“But that’s not the main purpose of digital currency.”
China’s progress toward CBDC launch plans has resonated among other major economies with Japan, the US, and the EU expressing their intentions to consider their sovereign digital currencies. On February 15, the Guangzhou branch of China’s central bank said all used paper money would be immediately destroyed to combat the COVID-19 crisis. Industry insiders say that Coronavirus could live on paper for some time.
By 2023, an estimated 10% of Chinese cities will start using digital currency based on Blockchain technology.
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