The Bank of Cathay's secretive digital currency tests take led to tremendous curiosity among Chinese citizens. Recently, the bank responded with an official explanation of the proposed digital Yuan and how it would work.

A banking concern representative confirmed on the China Central Television on April 19 that the new digital currency (also referred to as DC/EP, for "digital currency/electronic payment") airplane pilot exam has been carried out in the cities of Shenzhen, Suzhou, Xiongan new area, Chengdu, and the future site of the winter Olympics.

However the researcher stressed that these current tests do not imply that the digital Yuan has been officially issued for public use. The representative added:

"The current airtight test of digital Yuan volition not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, fiscal market and social economy exterior the examination environment."

In order to ensure that the central depository financial institution's digital currency is non oversold, commercial institutions will pay a 100% reserve to the fundamental bank, says the institution. In other words, at the time of issuance, the People's Bank of China will first exchange the digital currency to banks or other operating agencies. These agencies will then release the digital currency into public apportionment.

Technical design and main characteristics

The bank has completed the top layer of design, with the digital currency adopting a two-layer architecture and 2-tier commitment arrangement.

If the payment functions of online banking and payment platforms were to get down due to poor network signals, DC/EP's dual offline applied science will ensure that the digital Yuan will work equally effectively equally the paper Yuan. The banking concern explained:

"In the absence of a network, as long as ii mobile phones equipped with a DC / EP digital wallet are touched, the transfer or payment function tin can be realized."

According to the bank, The Chinese version of digital currency is not tied to any banking company account. They further claim that it is costless from the control of the traditional banking system.

Dissimilar other cryptocurrencies, the digital Yuan is launched by Communist china's central banking concern and is therefore backed past the state's credit. This is similar to an electronic version of the renminbi. The bank says that, compared with Bitcoin, this new digital currency will have greater inherent stability.

As Cointelegraph reported before, the Chinese cardinal bank's digital currency was tested as office of a ship subsidies scheme for local authorities and enterprise workers.