A view of an industry forum to release a serivce standard on the application of blockchain technology on tenomic data on Thursday. Photo: Li Xuanmin/GT

China's central bank is one step closer to issuing its official digital currency. It seems the People's Bank of China (PBC), in collaboration with private companies, has completed development of the sovereign digital currency's basic function and is now drafting relevant laws to pave the way for its circulation, industry insiders said.

As more central banks around the world are cutting interest rates to zero or even entering negative territory to release liquidity into the market amid the coronavirus (COVID-19) pandemic, China should accelerate the launch of its digital currency, industry insiders noted. 

Cryptocurrency is seen as the most convenient tool to translate a central bank's zero and negative interest rate policy to commercial banks. 

Alipay, the financial arm of Chinese tech firm Alibaba, reportedly publicized five patents related to China's official digital currency from January 21 to March 17. 

The patents cover several areas of digital currency, including issuance, transaction recording, digital wallets, anonymous trading support and assistance in supervising and dealing with illegal accounts, industry media reported.

Alipay has not responded to the Global Times' interview request as of press time. An industry insider, who spoke on condition of anonymity, told the Global Times on Tuesday that the patents concern the basic function of a digital currency, including circulation, payment, issuance and an anti-money laundering function.

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

But he noted that the next step, which involves digital currency legislation and working with banking and insurance regulators on supervision, could be more lengthy, which poses uncertainties for the exact date of the launch.

The Global Times reported earlier that a number of private firms, mostly based in Shenzhen, South China's Guangdong Province, such as Alibaba, Tencent, Huawei and China Merchants Bank, have participated in the development of the digital currency. 

Cao Yan, managing director of Digital Renaissance Foundation, said that in terms of development, it is more efficient for China's central bank to work with private institutions which have accumulated rich experience in blockchain technology and third-party payment. 

Cao believes China's central bank should accelerate the launch of its digital currency in the face of the unprecedented coronavirus pandemic. The global virus outbreak has prompted central banks like the European Central Bank and the Bank of Japan to cut their benchmark interest rates to near zero or moved into negative territory.

"If there is a chance China is considering lowering its interest rate into negative territory as an 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 the Global Times on Tuesday.