China's central bank aims to challenge the global financial status quo.
An article published in the PBoC-run magazine China Finance this weekend argued that Beijing should “accelerate the pace [of CBDC development] to seize the first track” in the global race to issue fiat digital currencies.
The article stated that China should seize the advantage of becoming a first mover in the arena of digital currencies, which it characterized as the “new battlefield” of inter-state competition.
At stake, the article claimed, would be significant changes to the geopolitical status quo in international finance and an opportunity to break dollar hegemony and internationalize the yuan.
Moreover, data feedback from a PBoC-issued digital currency would be beneficial for national monetary policy, all the more crucial in a post-pandemic landscape fraught with economic challenges.
The article outlined that, as of the end of April 2020, the PBoC’s research unit has filed 130 cryptocurrency-related patent applications, which cover the gamut of issuance, circulation and implementation.
The central bank’s research unit had first been established in 2015 and the project has proceeded apace in 2020. Testing of a digital wallet for the currency is underway by China’s state-run commercial banks.
In August, Beijing announced a trial run of its digital yuan in Shanghai, Beijing, Guangzhou and Hong Kong, involving 400 million people, or roughly 29% of the country's population.
The PBoC is also planning to use the digital yuan at the 2022 Winter Olympic Games. A senior executive recently indicated that the currency will be “mainly positioned” as M0 and as such, will need to comply with laws and regulations related to cash management.
Beyond the digital currency race, both China and the United States have vied closely in recent years in the field of blockchain research and development. A report published last week showed that despite Chinese firm Alibaba filing the most patents so far this year, the United States currently takes the lead as the country with the most blockchain patents.