China’s top expert on CBDBs says they can run on Ethereum
According to the former head of the digital currency initiative at the People’s Bank of China (PBoC), Yao Qian, central bank digital currencies (CBDCs) will grow “smart” and could one day run on Ethereum or similar Blockchain networks.
Yao, the current Director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, said this weekend that CBDCs should incorporate smart contract functionality instead of attempting to be just a digital form of physical cash.
Smart contracts
However, Yao told the International Finance Forum 2021 Spring Conference in Beijing, that the technology still needs to mature pointing at the number of security incidents arising from smart contract vulnerabilities. He also shared his concerns over the legal status of digital contracts and therefore central banks should be cautious and start with simple smart contracts and building complexity as security and legality become more assured.
Smart contracts automatically execute pieces of a blockchain code that carry out functions when certain conditions are met. They can therefore also be designed to complement or replace legal contracts.
Yao was head of the PBoC’s digital currency research lab from its start until he left in 2018, when he moved to the China Securities Regulatory Commission at the end of 2019. He authored and co-authored on many of the central bank’s patent applications related to CBDC technology.
No intermediaries
While the People’s Bank has been tirelessly trialing its digital yuan and is close to completing it according to reports, a CBDC does not necessarily be account-based, Yao said.
Theoretically, by making use of a “two-tier” approach, a digital yuan or any other digital currency could run on Ethereum’s network, or that of the Facebook-backed Diem (formerly Libra). By doing so central banks would not need intermediaries and could provide CBDCs directly to users.
Yao concluded:
“Layered operations can enable the central bank’s digital currency to better benefit groups without bank accounts and achieve financial inclusion.”
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Source: igaming
