China's Central Bank is Testing a Blockchain-Backed Digital Currency

The People's Bank of China has reportedly tested a blockchain-based digital currency along with a number of major commercial banks.

Jan 26, 2017 at 4:20 a.m. UTC
Updated Sep 11, 2021 at 1:01 p.m. UTC

China's central bank has reportedly tested a blockchain-based digital currency.

According to a report by Caixin yesterday, the People's Bank of China (PBOC) completed a trial on 15th December in which it demoed how transactions and settlements might take place via a custom distributed ledger system.

The test was reportedly held in conjunction with major domestic commercial banks including Industrial and Commercial Bank of China (ICBC), Bank of China and WeBank.

The report reads:

"The bank suggested the digital currency would not only reduce circulation costs but also increase transparency and curb money laundering and tax evasion."

Elsewhere, the report went so far as to suggest the pilot digital currency could be connected to the Shanghai Commercial Paper Exchange, forming a "national platform for bank bill transactions". In conjunction, the PBOC will also establish a digital currency research institute for which it is seeking experts in big data, cryptography and blockchain tech.

The reports follow statements from PBOC governor Zhou Xiaochuan in February, in which he hinted that the central was considering blockchain as one of a number of technologies that would enable it to issue a form of digital cash.

Further, the actions coincide with the PBOC's ongoing investigations into the country's major bitcoin exchanges, a process that began earlier this month and that has seen the startups enact a number of changes to trading policies.

Chinese yuan image via Shutterstock

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