A former director of the People’s Bank of China (PBoC) Digital Currency Research Institute suggested that central bank digital currencies (CBDCs) can run on the Ethereum network
Yao Qian, a former director of the PBoC’s Digital Currency Research Institute, has suggested that central bank digital currencies could operate on the Ethereum blockchain. He believes that CBDCs could become smart one day, allowing them to operate on networks like Ethereum.
Qian, who is now the director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, added that CBDCs shouldn’t just be limited to a digital form of physical cash. He wants them to integrate smart contract functionality. “Layered operations can enable the central bank’s digital currency to better benefit groups without bank accounts and achieve financial inclusion,” Qian said.
Despite his confidence, Qian believes there is more to do. The former director told the International Finance Forum 2021 Spring Conference in Beijing that the numerous exploits arising from smart contract vulnerabilities indicate that the technology still needs to mature. He added that there are also concerns over the legal status of digital contracts. With that in mind, Qian advised central banks to take a cautious approach when adding smart contract functionalities.
He suggests that central banks should start with simple smart contracts and develop more complex features as the security and legality become more concrete. Qian led the PBoC’s digital currency research lab from the moment it was launched until he moved to the China Securities Regulatory Commission two years ago.
The PBoC is one of the few central banks that has developed a digital currency. The bank is currently testing the digital Yuan to see how it would perform in the real world. So far, the PBoC has been working with commercial banks and payment providers to test the digital Yuan’s performance.