The e-CNY datasheet explains how to deal with the digital yuan, as well as reveals plans to implement smart contracts.
The People’s Bank of China published the Digital Yuan (e-CNY) White Paper for the first time. The document explains the high-level principles and features of the digital currency, and tells the story of the development of the project launched in 2014. The document acknowledges that one of the factors that pushed China to research and create e-CNY were cryptocurrencies, which carried increased risks and problems for the country’s 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. To tackle the relatively big price fluctuation concern of cryptocurrencies, some commercial institutions launched so-called ‘stablecoins,’ and tried to stabilize their values by pegging them to sovereign currencies or related assets,” the central bank continued. “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.”
In the e-CNY specifications, the People’s Bank of China mentions that one of the seven main features is programmability. This is the first time that the Chinese Central Bank officially announced that e-CNY will have the ability to program and create smart contracts.
“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.”
According to the People’s Bank of China, as of June 30, various e-CNY tests in several cities in China recorded 70 million transactions totaling RMB 34.5 billion or $5.3 billion through 20 million retail e-wallets and 3.5 million electronic wallets for legal entities.