The Digital Yuan Will Support Smart Contracts: China’s Central Bank

The digital yuan will support smart contracts according to the latest reports by the Chinese Central Bank as we are reading more in our latest cryptocurrency news today.

The Chinese central bank said it is evolving digital yuan can be programmed with smart contracts and it will respect anonymity to that extent that the law permits. The Chinese central bank’s digital yuan will support smart contracts and the bank said its new currency which is controlled by the central bank is nothing like the smart contract enabled crypto like ETH. The digital yuan is the People’s Bank of China’s central bank digital currency which is a digital version of fiat currency and it is the world’s biggest CBDC project that is not being piloted.

In a progress report published recently, the PBOC said that its digital yuan could be programmed with smart contract programmability that does not impair the monetary function and it is based on the premise of security and compliance. The smart contract-powered digital yuan will allow for automated payments as the bank said. Smart contract programmability is one of the seven design charatecteirsitcs that the bank mentioned in its report alongside anonymity and low costs. The bank clarified that anonymity will be managed by law enforcement. The report said:

“The e-CNY [digital yuan] system collects less transaction information than traditional electronic payment [systems] and does not provide information to third parties or other government agencies unless stipulated otherwise in-laws and regulations.”

The bank will set up a firewall to protect anonymity, implement security and privacy protocols, and block arbitrary information requests. The report said crypto like ETH can’t be used in daily economic activities due to the lack of intrinsic value, acute price movements, low trading efficiencies, and huge energy consumption. Crypto poses potential risks to financial security and social stability as the report said, especially in global stablecoins launched by other players in the private industry, to tackle the big price movements of crypto.

Stablecoins are cryptos pegged on a 1:1 basis to fiat currencies like Tether and USD and they are similar to CBDCs but they are not state-run. The PboC report came about a week after Fan Yifei who is a deputy governor of the bank said that the Chinese authorities are worried about stablecoins and they took measures against them. He didn’t specify what measures the bank took but said the pace of progress in payment systems is quite alarming and that the bank works against monopolies and disorderly expansion of capital. The digital yuan works on an invite-only basis and the invitation has been extended to 10 million citizens in the country.