China’s Central Bank Develops Blockchain System To Digitize Paper Checksbr>
The People’s Bank of China (PBoC), the country’s central bank, has developed a blockchain system that digitizes checks issued by domestic businesses.
Di Gang, deputy head of the digital currency research lab at the PBoC, said that the blockchain system, which comes after a year of development, will be used to solve the issue of check fraud in the Chinese market.
In the existing system, Di noted that there are large numbers of intermediaries that assume the role of banks to issue checks, which brings added risks of fraud. He added that this could lead to the circulation of fake checks among commercial banks, potentially undermining the country’s financial integrity.
In the new blockchain system, Di said that checks will be tokenized and all operations will be conducted by smart contracts. According to Di, the system allows “short transaction times” of about 3 seconds and ensures that the transaction has been completed and cannot be tampered with.
“Once the smart contract rules are set in the blockchain, any participant cannot alter the system easily,” Di said “Even for code updates, regulators will have full access to the record, which increases regulatory efficiency and reduces the cost by removing a manual cross-checking process for transactions.”
China, once home to the world’s largest crypto exchanges, banned cryptocurrency trading and initial coin offerings (ICO) in late 2017. But the country still remains a hub of activity for blockchain development.
Last month, China’s president Xi Jinping spoke in support of blockchain at the 19th annual conference of the Chinese Academy of Sciences in Beijing. He said that new generation technologies, such as blockchain, are reshaping the global economic structure.
“The new generation of information technology represented by artificial intelligence, quantum information, mobile communication, Internet of Things, and blockchain is accelerating breakthroughs in its range of applications,” the Chinese prsident said at the time.