China is on the fast track towards developing a Central Bank Digital Currency (CBDC). Much progress has been made over the past month, with the government taking several steps to improve on its blockchain and cryptocurrency capabilities.
Recent reports are now confirming that patents for the CBDC have been filed by the People’s Bank of China (PBOC), the country’s apex banking institution.
Patents Related to Asset Issuance, Control, and Storage
According to a recent report from the Financial Times, the United States Chamber of Digital Commerce recently conducted an investigative study that revealed, among other things, that the Chinese central bank has filed a staggering 84 patents for the creation of its digital currency. The patents reportedly focus on building protocols that will govern the supply and issuance of the digital asset, as well as building frameworks that will help bolster interbank settlements between commercial banks in the nation and ensure seamless integration of the digital yuan with China’s economic infrastructure ecosystem.
Some other patents also focus on the creation of a middle-layer entity that will make it easy for customers to make deposits of fiat currency to withdraw the digital yuan. Related patents to this process have also reportedly mentioned the People’s Bank creating digital wallets and chip cards that will make it easy for people who hold the digital yuan for retail purposes to store and access them.
Contrasting Approaches to CBDCs from China and the U.S.
Perianne Boring, the President of the Chamber of Digital Commerce, remarked to the news source that China is gearing up to make massive investments in this digital currency, while pointing out a much different approach to the same subject by the United States.
Like a lot of technological advancements that China makes, progress on the digital currency is moving at blinding speed. President Xi Jinping just gave an endorsement of blockchain technology in late October, and in the few months since then, the country has made tremendous progress towards the development of this digital asset.
An official launch date hasn’t been provided yet, but all estimates point to sometime this year, and several details concerning the asset have already begun to surface.
As Boring said, the approaches of China and the United States- the two largest economies in the world- to the issue of CBDCs have differed incredibly. While China has embraced the technology, the United States has continued to drag its knuckles and stall. Several countries have now begun to make appeals to Uncle Sam to take this issue much seriously or risk losing its status as the single economic superpower to China.
Last week, Kozo Yamamoto, the head of the research commission on finance and banking systems at Japan’s Liberal Democratic Party (LDP) made a big call. He wants the U.S. Federal Reserve to join a consortium of central banks- including Japan, Canada, the United Kingdom, Switzerland, and Sweden- in studying the effects of issuing digital currencies. He believes the digital yuan is a clear and present danger that could become the standard for national digital currencies and as the global reserve currency.