Following news last month that China was looking to adopt blockchain technology in a more progressive manner, we are now hearing that the country is investigating blockchain for cross-border payments.
The news comes from Lu Lei, deputy head at China’s foreign exchange regulator, the State Administration of Foreign Exchange (SAFE). Lu says the government is looking to explore the development of a system related to cryptocurrency and foreign exchange based on new technology.
The regulator has already launched a blockchain system last year which is now operational across 19 Chinese states. The system is designed to improve risk management and cross-border payments using blockchain and AI technology. Now, with a new boost from Chinese president Xi Jinping, the developments will be further expanded and accelerated.
In another blockchain-related development, the Central Bank of China has begun issuing bonds on a proprietary blockchain system. The $2.8 billion worth of bonds, issued in the local Yuan (RMB) currency, is designed to help fund approximately 410,000 small businesses, according to the China Development Network.
Fellow Chinese bank, the People’s Bank of China, is currently developing a digital blockchain-based version of the local Yuan currency. The currency is touted to be tested by several banks and government agencies in Shenzhen and Suzhou before the end of the year.
It is believed that China’s renewed interest in blockchain technology stems from a fear of it being left behind if other countries manage to develop and harness hidden power in the nascent technology. While blockchain technology undoubtedly offers new and unique ways to manage financial systems it is not yet clear just how useful the technology might be in the future.
However, it’s unlikely that China will adopt blockchain in the traditional decentralized sense as implied by Bitcoin creator Satoshi Nakamoto. China’s authoritative government is more likely to impose strict rules governing a centralized blockchain that will control personal freedoms rather than promote them.
The leading cryptocurrency Bitcoin continues to slide today following a minor boost last week that saw it bounce back from a low of $6,400. It’s now feated that the cryptocurrency could fall back below $7,000 before the start of the new decade next week.