Central Bank Digital Money progress accelerates, related patents continue to emerge

Recently, the People's Bank of China has once again emphasized the need to advance the research and development of legal digital money, a news that has attracted significant market attention. Data shows that the Central Bank Digital Currency Research Institute has obtained 76 relevant patents, and if including patents under review, the total reaches as high as 86.

Since December 2019, the research institute has announced several key patents related to the recovery, issuance, circulation, and generation of Digital Money. This indicates that, on a technical level, the preparations for the issuance of the Central Bank Digital Money ( CBDC ) may be basically ready.

However, the successful launch of CBDC requires not only the efforts of the Central Bank but also the collaboration of supporting institutions in the aspects of issuance, distribution, and circulation. Patent searches show that Alipay and the Industrial and Commercial Bank of China have a considerable number of patent applications in the area of CBDC, making them the main force in promoting the implementation of DCEP.

Alipay recently announced five patents related to DCEP, covering aspects such as issuance, transaction records, digital wallets, support for anonymous transactions, and assistance with regulation, essentially achieving comprehensive support for the issuance of DCEP.

As the leading bank among the Big Four, the Industrial and Commercial Bank of China (ICBC) has maintained a leading position in CBDC-related patents. In particular, in overcoming the technical challenge of achieving "dual offline payment," ICBC proposed two solutions based on blockchain and non-blockchain. Moreover, ICBC has also launched patents that facilitate merchants in receiving Digital Money, which contributes to the widespread adoption of DCEP.

Although other institutions such as China Construction Bank, Agricultural Bank of China, and Bank of China have not seen directly related patents in DCEP, they have also made arrangements in the blockchain field, which may indirectly support the promotion of DCEP. For example, China Construction Bank has launched a blockchain trade finance platform, Agricultural Bank of China has introduced a blockchain-based financing system, and Bank of China has developed an electronic wallet based on distributed ledger technology.

Companies such as Huawei and Changliang Technology also hold a place in the DCEP industry chain. With more patents being published, it is expected that the list of related enterprises will further expand.

It is worth noting that, although blockchain technology initially inspired the concept of Central Bank Digital Money, it does not seem to be the mandatory technical route for DCEP at present. The Central Bank Digital Money Research Institute pointed out that the decentralized characteristics of blockchain conflict with the centralized management requirements of the Central Bank. Central Bank Governor Yi Gang also stated that Central Bank Digital Money does not presuppose a technical route.

The Bank of England has also stated that its CBDC does not necessarily have to be based on distributed ledger technology. This indicates that major central banks around the world are reassessing the position of blockchain technology in CBDCs.

However, former Central Bank Digital Money Research Institute Director Yao Qian believes that the current CBDC development plan has not fully leveraged the advantages of distributed operations under the central control of the Central Bank. He suggests adjusting the perspective to achieve the goal of "centralized control and distributed operations."

With the advancement of various countries' Central Bank Digital Currency (CBDC) plans and the development of projects like Libra, the competition and cooperation in the technology related to CBDC will become increasingly intense. Regardless of which technological route is ultimately adopted, CBDC will have a profound impact on the fintech sector.