In brief The People's Bank of China has reportedly finished the first step of developing its digital currency.

Now the central bank needs to come up with the corresponding legislations.

Digital currency is the most convenient way for PBoC to lower interest rates, say insiders.

The People’s Bank of China (PBoC) has reportedly finished the first—technical—step of developing its sovereign digital currency. Yet, the launch date is still vague; now the central bank needs to come up with relevant laws for its circulation, and that can take even more time.

An anonymous insider close to the situation told the Global Times that digital currency is seen as the most convenient way for the PBoC to translate zero and negative interest rate policy to commercial banks—a measure forced by the growing coronavirus pandemic.

The coronavirus continues to spread around the world. Image: Shutterstock.

According to the source, Alipay, the financial arm of Chinese tech giant Alibaba, has already applied for at least five patents from January 21 to March 17—all connected to the PBoC’s digital currency in some way.

"Judging from the patents, the first step of technological development has been basically completed," the insider said.

He added that the patents cover various areas of the digital currency, including issuance, transaction recording, digital wallets, anonymous trading support and assistance in supervising and dealing with illegal accounts.

Yet, the insider noted that digital currency legislation and establishing banking and insurance framework and regulatory supervision could prove to be a long process—even more so than the development itself. Because of this, the exact or even approximate date of the launch is still unclear.

Per the report, a number of private firms such as Alibaba, Tencent, Huawei and China Merchants Bank have participated in the development of China’s digital currency.

Cao Yan, vice director of the Advanced Research Institute of Blockchain under the Yangtze Delta Region Institute of Tsinghua University, told the outlet that it was a logical choice for China’s central bank to choose private companies deeply familiar with blockchain technology as its partners.

As Decrypt reported earlier, banks and institutions around the world are currently cutting interest rates, slashing them to zero or even venturing into negative territory in the face of an unprecedented global pandemic. As such, Cao argues the PBoC should accelerate its digital currency efforts or risk being left behind.

"If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that," Cao told Global Times.

As if the coronavirus has not delayed China’s digital currency enough already.