While China has actively iterated its negative opinion on cryptocurrencies, the Asian nation is actively looking for ways to implement blockchain technology in its daily financial operations.
According to recent reports, not long ago, the People’s Bank of China (PBoC) has developed a blockchain-based financial trading solution that would be used to process a variety of transactions, with the focus being put on foreign currency exchanges. Now, the system has been in use for a while, and the PBoC recently issued a press statement, mentioning that the blockchain platform has processed over $4.36 billion-worth of foreign exchange transactions.
At this moment in time, the report mentions that the blockchain system has been implemented at 483 bank branches, belonging to 28 local banks in Shenzhen. When compared to worldwide transaction volumes, this one is still fairly low, granted that the system is being used only in the Shenzhen province. Future integration of the platform in China’s major cities would likely lead to a $100B+ volume.
According to the People’s Bank of China, blockchain technology helps deal with the longsome process of paper trail management. This way, exchange transactions can be carried out virtually instantly, while all pertinent data is recorded and stored transparently on the chain.
Given the current success of the platform, Shenzhen authorities are now preparing to further leverage the potential of blockchain tech. As such, the Shenzhen branch of the PBoC, alongside the Shenzhen Taxation Bureau, recently signed a cooperation agreement for a future automatic tax filing system, based on the blockchain trade finance platform.
It is likely that Shenzhen is one of China’s best regions to see blockchain technology in action. The local government administration has signed several partnerships, and is actively working on leveraging the tech for public administration and financial matters. At this time, all projects are either in development, or in a testing phase. Yet, Shenzhen is likely the best region for such experiments to be carried out, given that it represents one of China’s biggest financial and technology hubs. For instance, back in May, the region’s Fintech Research Institute announced several job openings for blockchain experts. Lastly, Chinese enterprises regard blockchain as one of their top-five strategic priorities.
China’s unique centralized economy allows for a full-scale implementation of blockchain based financial systems. A future development of a central bank digital currency (CBDC) can certainly bring digital money to the hands of most citizens. However, China doesn’t seem to be willing to open up to the worldwide digital currency and blockchain market, which may lead to difficulties later down the road.