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Home | Yao Qian says Digital currency will definitely move towards smart currency and CBDCs could operate on Ethereum

Yao Qian says Digital currency will definitely move towards smart currency and CBDCs could operate on Ethereum

From May 29th to 30th, the International Finance Forum (IFF) (國際金融論壇) 2021 Spring Conference was held in Beijing. The theme of this conference is “Post-epidemic era: Global governance and international cooperation”.

In the forum “Digital Currency and Future Digital Transformation”, Yao Qian (姚前), Director of the Science and Technology Regulatory Bureau of China Securities Regulatory Commission (中國證監會科技監管局局長), said that some people worry that loading smart contracts other than the functions of the legal currency itself will affect their legal compensation functions. Therefore, it is recommended to be cautious about the central bank’s digital currency loading smart contracts. The central bank digital currency research projects carried out by Canada, Singapore, the European Central Bank, and the Bank of Japan all experimented with smart contracts. He believes that digital currency cannot just be a simulation of physical currency, and if the advantages of “digital” are to be used, the future digital currency will definitely move towards smart currency.

He also said that some system disasters caused by smart contract security vulnerabilities were also observed in the early stage, indicating that the maturity of the technology needs to be improved. So, the central bank’s digital currency should start with simple smart contracts and gradually expand its potential on the basis of full consideration of security.

In addition, Yao Qian said that the two technical routes of account-based and token-based are not a mutually exclusive relationship. In fact, tokens are a new type of account – an encrypted account. Compared with traditional accounts, users have stronger independent control over encrypted accounts.

Regarding the operational structure of the digital renminbi, Yao Qian believes that two-tier operation and single-tier operation are not an alternative relationship. Just like taxis and buses, the two seem to be compatible and compatible for users to choose from.

“We can imagine that if digital dollars and digital yen run directly on blockchain networks such as Ethereum and Diem, then central banks can use their BaaS services (Blockchain as a Service,後端即服務) to directly provide users with central bank digital currencies without the need for intermediaries. 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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