China's central bank completed “the infrastructure of a system that issues digital checks based on a blockchain with smart contracts technology". This was stated by Di Gang, the deputy head of the People's Bank of China Laboratory for Digital Currency Studies, according to a local news source.
Why it is important
- In the opinion of experts, in the next three years, blockchain will be integrated into critical sectors of the economy. The authorities will be able to apply technology in the energy sector, confirming payment of bills, tracking goods, health care, and protecting copyright. Xi Jinpin, Chinese President, said that the country should develop blockchain technology to achieve economic success.
According to Di Gang, the laboratory was engaged in scientific research for about a year, which started in 2016. Then the agency for the first time reported that it was eyeing the technology of blockchain to solve the problem of check fraud in the Chinese market. Later, in January 2017, the service stated that it successfully tested the prototype system in a virtual environment.
As Di explains, in China, paper checks function as money orders. Since most businesses are not able to determine the authenticity of checks as well as banks, the number of counterfeit checks is growing.
The blockchain platform will allow to control such transactions with the help of smart contracts. Di believes that this will help solve the problem of fraud, since regulators will be able to monitor all movements of a certain check.
"Once the smart contract rules are set in the blockchain, any participant cannot alter the system easily. Even for code updates, regulators will have full access to the record, which increases regulatory efficiency and reduces the cost by removing a manual cross-checking process for transactions," – he said.
By Ekaterina Ulyanova