The People’s Bank of China (PBOC) has published the White Paper of the digital yuan (e-CNY) it is developing. The document announced the use of smart contracts.
documentation the digital yuan specifies the prerequisites for its creation. The idea of developing a state digital currency came from the NBK back in 2014. China began to conduct research after the emergence of cryptocurrencies, believing that they could pose a serious risk to the current financial system.
NBK researchers stated that bitcoin and other crypto assets cannot be used as traditional money in everyday life due to high volatility and lack of intrinsic value. In addition, mining cryptocurrencies based on the Proof of Work (PoW) consensus requires high electricity consumption.
The authors of the document called cryptocurrencies speculative instruments that pose risks to financial security and social stability. NBK analysts also touched upon the topic of stablecoins. Despite their peg to fiat currencies, they too pose a challenge to the international monetary system and monetary policy, according to the e-CNY White Paper.
It also states that one of the key characteristics of the digital yuan will be the ability to program it through the introduction of smart contracts. The NBK believes that their use will not disrupt the monetary functions of the digital yuan, but will increase its security. Smart contracts will allow e-CNY payments to be made according to predefined terms or conditions agreed between the two parties.
The document lacks a roadmap for the development of e-CNY, and the schedule for its launch is also not defined. The NBK reported that as of June 30, during testing of the state cryptocurrency in different cities of China, about 70 million transactions were made with the digital yuan, totaling 34.5 billion yuan (about $ 5.3 billion).
Recently, a former NBK researcher said that the digital yuan was created to counter the growing popularity of private payment systems such as Alipay. After numerous tests of the digital yuan, this month Chinese banks have already launched a program to introduce it among the country’s population.