People’s Bank of China (PBoC), the country’s central bank, revealed that it would accelerate the pace of research and development of its fiat digital currency (DC/EP).

During an August 2 video conference centering on the institute’s work focus for the second half of 2019, the PBoC stated that it should accelerate the R&D of its fiat digital currency, meanwhile pay close attention to the development of other domestic and foreign virtual currencies, and continue to strengthen internet financial risk remediation.

The PBoC has seemingly prioritized the development of a digital CNY in the H2 2019 in response to the growing adoption of cryptocurrencies globally, especially following the announcement of cryptocurrency project Libra from social media giant Facebook in mid-June. Of late, retail giant Walmart has also been revealed to work on issuing a USD-pegged digital currency that is similar to Facebook’s Libra.

It’s not just business enterprises that are considering to issue their digital currency, central banks, including the Bank of England, the Bank of Canada and Swedish central bank Riksbank, are also working on their fiat digital currencies.

China’s central bank has initiated the study on digital currency and its central bank-backed digital currency early in 2014 when the cryptocurrency Bitcoin began to gain popularity in the country. In an effort to promote the R&D of digital currency, the PBoC has specially set up digital currency research institutes in several cities like Shenzhen and been working closely with local organizations. It has also been working with market institutions on creating central bank digital currency after receiving approval from the State Council.

As of August 4, 2019, the PBoC has already filed 74 patents centering on its digital currency, according to data from China’s State Intellectual Property Office (SIPO).

According to Wang Xin, head of the PBOC’s digital currency research bureau, the central bank digital currency, defined as M0 in China, is sort of cash substitution. He points out that the digitization of central bank money helps optimize the payment function and improve the status of central bank currency. The central bank digital currency can be an interest-bearing asset to meet the holder’s reserve demand for safe assets, and be a floor on the interest rate of bank deposits.

Industry insiders say China has created a plurality of digital assets in the world. In this case, the country has advantages in issuing fiat digital currency and needs to do something in this field. On the other hand, China’s digital payment system such as Alipay has already been significantly developed, which boosts most Chinese’s understanding and interest in digital currency.