China is once again moving to consolidate the development of its CBDC digital currency through its blockchain service network BSN, while the IMF notes that 77% of central banks cannot distribute CBDC currencies directly.
The Asian giant has a strong enough conviction to become the first power in the world to lead the launch of a CBDC. China is making great and important efforts to consolidate its position as a global technological leader, and is increasingly closer to leading one of the most revolutionary technologies of our times: the blockchainThe Asian giant is implementing this technology to develop its central bank digital currency. CBDC (Central Bank Digital Currency)Called DCEP (Digital Currency Electronic Payment) or digital yuan; but it is also using the full potential of this disruptive technology to create a network of services known as BSN, the Blockchain Services Network.
This blockchain service network will allow the nation to not only integrate its CBDC digital currency, but also the digital currencies developed by other central banks internationally and globally. The BSN is known as the “Internet of Blockchain”, as it is designed to connect different blockchain networks, and allow users to carry out local, national and international transactions that promote and optimize global trade. Thus, in what would be another step to consolidate this ambitious project, the nation announced its roadmap 2021, which integrates several important developments to build a robust universal digital payment network (UDPN).
Meanwhile, experts from the International Monetary Fund, the IMF, published a article where they evaluate the real capacity of central banks to issue and distribute their own CBDC currencies, pointing out that almost 80% of them are not authorized, by law, to exercise these powers.
It may interest you: China: BSN integrated 6 blockchains into its service network, while WeChat is banned in the United States
A growing global need
CBDCs are becoming the technological development that most central banks want to have, and not just out of whim or competition, but rather out of necessity. While some nations chose to develop this innovation as an essential element to evolve the way they provide their services, other entities are adopting it as a way to stay at the forefront of new developments, driven by the fear of being left behind; although this is not the case in China.
Universal Digital Payment Network (UDPN)
In its roadmap for this year, the Asian nation is betting on adopting CBDC digital currencies as a safe and liquid government-backed payment method for the public. Thus, to boost the creation of innovative payment systems and significantly increase the global circulation of commodities and settlement between different currencies, the BSN plans to build a Universal Digital Payment Network (UDPN), which will be powered by CBDC currencies from various countries around the world.
UDPN is intended to be a convenient and cost-effective global payment solution for everyone, where any information system, banking, insurance, mobile applications, and so on can call the UDPN services to enable an innovative payment and transfer method. According to the roadmap, a period of 5 years is estimated to complete the development of this payment network, although its beta version will be available in the second half of this year.
Expansion and consolidation of the BSN
China will establish 150 new PCNs (public city nodes), which will be located in second- and third-tier cities, in addition to another 50 international nodes that will be located in developed countries and developing countries with economic potential. In addition, the BSN will promote the development of its internal, or private, blockchain network in China, integrating new supports to cover the 23 provinces of the country.
Furthermore, to consolidate the development of the network, the BSN plans to strengthen its partnerships with cloud service providers, portals, and more, to make its services more cost-effective and interoperable for individual developers. In addition, the network developers will also promote blockchain technology awareness and education to encourage more individuals and businesses to use and participate in this technology. The BSN believes that the development of CBDs will completely transform the way traditional systems work, so it is preparing to respond to all the challenges and opportunities that lie ahead in 2021 for this technological innovation.
China is making significant progress in the development of its BSN network, and to date it has already integrated 6 blockchain networks of great importance in the digital world, as well as used this network to tokenize the first real gold bar on the blockchain.
Digital currencies and central banks
Although CBDC digital currencies are being adopted around the world, and more and more central banks are announcing their participation in these developments, the IMF notes that very few are actually authorized to issue and distribute them directly.
The experts Catherine Margulis, consulting advisor to the Tax and Financial Law Unit of the Legal Department of the IMF, and Arthur Rossi, Research Officer in the Financial and Tax Law Unit of the same department, points out that nearly 80% of the world's central banks “they are not authorized to issue a digital currency” According to the IMF report, the issuance of digital money is very different from the issuance of physical, or fiat, money due to the functions and powers that each central bank has already established in advance. To change this, and for each central bank that wants to issue a CBDC to be able to do so, experts point out that they must seek approval for a new formal regulatory framework, in addition to having a digital infrastructure. “instead”, which allows such innovation.
Experts also point out that a more detailed analysis of all the possible implications associated with the issuance of digital money is required, since although banks could issue their own digital currencies, they cannot force citizens to use them.
In turn, the Deutsche Bank, one of the largest and most important banks in the world, he pointed that CBDCs are inevitable, and that they will be the next generation of money, even replacing fiat money in our times.
Continue reading: New pilot test for the Chinese CBDC, the DCEP will make its entry this December 12 in Suzhou
