Central Bank Digital Money R&D Accelerates, longer Actively Participate

Recently, the Central Bank of China reiterated the need to firmly promote the research and development of legal Digital Money. This news has sparked a strong reaction in the market, with stock prices in the Digital Money-related sectors rising significantly.

Industry analysts believe that Central Bank Digital Money may be accelerated after the pandemic. It is expected that pilot work will first be carried out among several large banks. This will bring about the need for upgrades in the banking system, including the transformation of hardware and software such as core systems, databases, and ATM equipment. At the same time, personal mobile devices and POS machines may also need to be updated. In addition, the issuance of digital money will promote the widespread use of electronic bills, and encryption technology will run through the entire industry chain.

It is reported that the People's Bank of China may have collaborated with some enterprises to complete the basic functional development of Digital Money, and is currently formulating relevant regulations in preparation for the subsequent issuance.

Public information shows that the Central Bank Digital Currency Research Institute has obtained 76 relevant patents, and if we include the patents under review, the total reaches 86. It is worth noting that since the end of 2019, the institute has announced several key patents related to the management, circulation, and generation of Digital Money, among other core aspects. This indicates that, from a technical perspective, the issuance preparations for the Central Bank Digital Currency are already quite mature.

However, the successful implementation of Central Bank Digital Money requires not only the efforts of the Central Bank but also the cooperation of related institutions in issuance, distribution, and circulation. In addition to the Central Bank research institute, some financial institutions and technology companies are also actively positioning themselves.

A large commercial bank has performed outstandingly in the field of Digital Money, especially in making progress in addressing the technical challenge of "dual offline payment." The bank has proposed a software-based solution that may be easier to promote and apply. In addition, the bank has developed a system that allows merchants to receive payments without needing to open a Digital Money account, which contributes to the widespread adoption of Digital Money.

A well-known payment platform recently announced multiple patents related to Central Bank Digital Money, covering various aspects such as issuance, transaction records, and digital wallets, demonstrating comprehensive support for the issuance of digital money.

Although other financial institutions have not directly announced patents related to Digital Money, they have also made arrangements in the blockchain field. Several large banks have already applied blockchain technology in areas such as trade finance and agricultural finance, accumulating experience for the future promotion of Digital Money.

In addition to financial institutions, some technology companies are also actively participating. A certain telecommunications equipment manufacturer has signed a cooperation agreement with the Central Bank-related department, and some fintech companies have also stated that they are ready with technological reserves for Digital Money.

It is worth noting that although blockchain technology was initially considered to be the core technology of Central Bank Digital Money, recent research indicates that digital money does not necessarily have to rely on blockchain. The Central Bank has stated that it will not preset a technological route, which means that the final technological solution may adopt a combination of various technologies.

Overall, the research and development of China's Central Bank Digital Money is accelerating, with multiple forces actively participating. As technology matures and relevant regulations improve, we may soon see the official launch of the digital renminbi. This will have a profound impact on the financial system and economic operations, warranting ongoing attention.