One of the Chinese digital yuan architects, Yao Qian has discussed the possibility that CBDC could operate on Ethereum and Diem. Diem is a Facebook-backed blockchain platform. The launch of CBDC using blockchain technology is a part of a two-tier structure.
Qian said CBDCs will become more “smart” and could one day operate on a blockchain network like Ethereum.
Yao Qian is the science and technology supervision bureau chief at the China Securities Regulatory Commission (CSRC) and Former Head of the central People’s Bank of China (PBoC) digital currency department. He commented on Sina and Chain news over the weekend at the 2021 International Finance Forum.
Yao Qian said, “Imagine if the central bank’s digital currency runs directly on blockchain networks such as Ethereum and Diem, then the central bank can use their BaaS services to directly provide the central bank’s digital currency to users without need for intermediaries”.
The two-tier CBDC models posit a central issuing body distributing tokens to commercial banks, which acts as intermediaries. Yao believes central banks could seek to use two issuing models. One solution uses intermediaries and another solution that would bypass commercial banks altogether.
He said, “I personally think that two tier CBDC models and single tier operation models are not alternatives. Just like taxis and buses, the two seem to work in parallel and are compatible for users to choose from”.
Yao attended the international Finance Forum 2021 spring conference in Beijing. He stated that the number of security incidents arising from smart contract vulnerabilities shows the technology still needs to mature. There are concerns over the legal status of digital contracts.
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Smart contracts are pieces of blockchain code, which execute automatically when certain conditions are met. It can also complement or replace legal contracts.
Back in China, Qian holds a reputation for his public support for digital currency. He is also known as the “Crypto Dad” of the Asian nation.
Yao led the CBDC research lab from its inception until he left PBoC in 2018. He is moving to the China Securities Regulatory Commission at the end of 2019. He cited as an author on many central bank’s patent applications relating to CBDC technology.
