The People's Bank of China has just released the first white paper of the national digital currency (e-CNY).
As reported by The Block, the document explains the high-level principles of the digital yuan, its features and the progress in the development of the project since 2014. While no additional details about the currency have been unveiled, it has been reported the currency will be compatible with smart contracts.
China's central bank has said the creation of the digital yuan was prompted by the rise of cryptocurrencies and the risks they pose to the traditional financial system:
"Adopting blockchain and encryption technology, cryptocurrencies such as Bitcoin are claimed to be decentralized and entirely anonymous. However, given their lack of intrinsic value, acute price fluctuations, low trading efficiencies and huge energy consumption, they can hardly serve as currencies used in daily economic activities.
In addition, cryptocurrencies are mostly speculative instruments, and therefore pose potential risks to financial security and social stability. Some commercial institutions even plan to launch global stablecoins, which will bring risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management and etc."
Subscribe to our Telegram channel to stay up to date on the latest crypto and blockchain news.
One of the distinguishing features of the digital yuan will be its programmability:
"The e-CNY obtains programmability from deploying smart contracts that don’t impair its monetary functions. Under the premise of security and compliance, this feature enables self-executing payments according to predefined conditions or terms agreed between two sides, so as to facilitate business model innovation."