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Deutsche Bank and PBOC will carry out open banking activities such as repurchasing of treasury bonds, policy financial bonds, central bank bill issuance and other trading instruments.

In this regard, Rose Zhu, the bank’s chief country officer in China told the media, “This PBOC appointment recognises the strength of Deutsche Bank’s capital markets franchise, and reflects China’s determination to continue opening up its capital markets. The rapid development of the China market provides broad opportunities for global participants and Deutsche Bank will continue to deepen the China market, leverage its global network, and exercise best practice risk management to support the country’s continuous capital markets opening and development.”

Last month, it was reported that Deutsche Bank is replacing its global pricing engine for emerging-market currencies in London with one in Singapore. This is because of the level of surging trading in the Asian continent and also the increasing importance of China’s renminbi.

Deutsche Bank also plans to close its branches in Germany and this could lead to 400 to 450 people losing their jobs in the country, media reports said. The bank is planning to eliminate around 20 percent of its workforce in a four-year restructuring plan, which was announced in 2019. The bank also announced last year that it plans to close 100 out of its 500 Deutsche Bank-branded branches.

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If approved, the trial is expected to be similar to one held in Shenzhen earlier in October. The previous trial allowed Chinese citizens to apply for a 200 yuan share of 10 million units of the CBDC in a lottery which was worth around $1.5 million.

Earlier this year, China’s Ministry of Commerce announced that it will launch digital currency pilot programmes in three major regions in the country which are the Beijing-Tianjin-Hebei region, Yangtze River Delta, and the Greater Bay Area. The CBDC programmes are set to be launched in some major cities in China such as Beijing, Tianjin, Hong Kong and Macau.

Earlier this year, The People’s Bank of Chinas said  that it will increase research and development when it comes to the digital yuan. The topic was discussed during the 2020 national telecom conference organised by the central bank.

To counter China, Japan is also working extensively on its own CBDC. Japan recently announced that 30 Japanese firms will carry out a pilot testing of the digital yen. The project is expected to kick off in 2021. The 30 Japanese firms include telcos, utility companies, retail firms, stock exchange brokerage firms and Japan’s three largest banks.

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The stablecoin, proposed by China will be expected to stimulate trade between China, Hong Kong, Korea, and Japan. The stablecoin will also improve cross-border payments and clearing services with a new payment network and digital wallet services for businesses in these regions.

The stablecoin would also reduce currency conversion costs, improve transaction settlement times, and serve as a test case for other national digital currencies. It would also help in rejuvenating the economy in the region, which has been dampened by the coronavirus pandemic.

Reportedly, the project would be headed by the People’s Bank of China (PBoC) and the basket of underlying collateral would follow the special drawing rights (SDR) model of the International Monetary Fund (IMF), where each country’s currency is assigned a different weight based on its economy.

Shen Nanpeng, a global managing partner at Sequoia Capital and also a member of the Chinese People’s Political Consultative Conference, proposed the digital currency during a national session held earlier this week.

The stablecoin won’t be built on blockchain, and would be more comparable with Facebook’s Libra rather than cryptocurrencies.

Besides the stablecoin, China is also working to launch its own digital currency in the coming years. The project has been under development since 2017, and earlier this year it received an additional boost in the form of fresh funding.

China has also accelerated the digital currency process in light of the coronavirus pandemic, which originated in the Chinese city of Wuhan.

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Around 53 of these 224 recently approved blockchain projects by China are in the fintech sector.

The approved projects include some big names such as Baidu, JD, Alibaba, Suning, China Mobile, China Merchants Bank, and others. Reportedly, Walmart China’s blockchain project for tracing food safety has also been approved by Chinese officials.

Since the coronavirus pandemic originated in the Chinese city of Wuhan last year, China has been fast-tracking blockchain projects in the country. However, the ulterior motive of China is to launch its own digital currency.

Reportedly, China has formed a National Blockchain Committee with giants like Huawei and Tencent to determine standards and form a regulatory framework for the industry in China.

Earlier this month, China-based multinational telecommunication and technology giant Huawei signed an agreement to accelerate the adaptation of blockchain technology in the Chinese district of Shenzhen.

The agreement signed with Huawei is a part of the government’s plan to develop Shenzhen as a blockchain-friendly region. Shenzhen is already considered to be the biggest technology hub in China and serves an important purpose-being the link between Hong Kong and mainland China.

Reportedly, Huawei also signed a deal with the People’s Bank of China (PBoC) last year, to boost the application of blockchain in the country.

During the same period, the Chinese central bank also revealed its decision to increase research and development when it comes to the digital version of its currency, yuan.

The topic was discussed during the 2020 national telecom conference organised by the central bank.

“The People’s Bank of China will undoubtedly further its research and development of the national digital currency with enhanced top-down design,” the bank said in a notice.

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The central bank of China raised its stake from 0.8 percent to 1.01 percent, which is equal to 17.49 million shares of HDFC.

Keki Mistry, VC, and chief executive at HDFC told the media, “The disclosure has been made now since the stake has hit 1 regulatory threshold. PBOC has been accumulating the shares over a year and is now holding 1 percent.”

According to rules, a company is required to disclose the name of the shareholders only when they hold more than 1 percent in a company.

The recent development comes at a time when it is perceived that China is using the Coronavirus pandemic to buy ailing shares across the globe.

However, the central bank of China is not bound by and regulations that stop it from investing in any Indian company. Interestingly, around 70 percent of HDFC is owned by foreign institutional investors.

Due to the coronavirus pandemic, shares of HDFC has lost 32 percent of its value from its January 14 high of 2500 per share.

The PBOC trimmed the mandatory reserve ratio for rural and small commercial banks by one percentage point and free up credit in response to the slowdown caused by the coronavirus pandemic.

Reportedly, this will lead to the freeing up of $56 billion of liquidity, with half the cut taking effect on April 15 and the rest on May 15.

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The topic was discussed during the 2020 national telecom conference organised by the central bank last week.

“The People’s Bank of China will undoubtedly further its research and development of the national digital currency with enhanced top-down design,” the bank said in a notice issued last week.

The notice further stated that steady progress was made in reform and innovation in key areas, and statutory digital currency research and development work was carried out steadily.

The coronavirus epidemic could speed up the process of launching the digital version of yuan, according to Lihui Li, former president of the People’s Bank of China.

In order to stop the spread of the virus, the Chinese government has seized and quarantined old paper notes. Authorities asked Chinese banks to disinfect cash before issuing it to the public. Physical cash was also removed from high-risk places such as hospitals and markets.

According to media reports, China has spent around five years in research and system development in this regard. The central bank also carried out the first real-world pilot of the currency in December 2019.

Last year, China also rolled out new laws with regard to online encryption as a part of its plan to launch a digital version of yuan and take greater control of the digital economy.

Japan is also reportedly planning to launch its own digital currency to counter China.

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The funds will be used by the People’s Bank of China- the Chinese apex bank, for blockchain-based trade finance research and development projects.

The Chinese government will disperse the funds in the next three years.

The blockchain-based trade finance platform, which was launched by the People’s Bank of China in September 2018, has reportedly processed $12.4 billion worth of transactions for 38 banks and around 1,900 firms that have signed up to use the platform. Some of the biggest names using the platform are Bank of China, Ping An, and Standard Chartered.

The trade finance platform has helped reduce transaction time from 10 days to nearly 20 minutes. It has also helped make the process 6 percent cheaper.

The investment is also a part of the government’s measures to curb the spread of the Covid-19 virus which originated in the Chinese city of Wuhan. According to local media, around 20 blockchain applications were launched since the epidemic to help China contain the virus.

The central bank aims to make the process of sharing information safe, more secure and add more small and medium-sized enterprises (SMEs) to the network. Reportedly, the platform has significantly improved the efficiency of SME’s loan approvals.

The platform is administered by the central bank’s Digital Currency Research Lab, the Chinese Academy of Sciences, leading Chinese universities and major local banks.

Last year, the central bank entered into an agreement with the Hong Kong Monetary Authority to collaborate on the development of a trade finance platform proof-of-concept. The new platform will integrate the Bank of China’s Trade Finance Platform and Hong Kong’s eTradeConnect.

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Amid the ongoing trade war with the US, recent speculations suggested that the central bank would use certain stimulus to prevent a further slowdown of the Chinese economy.

The People’s Bank of China confirmed another media speculation about the use of a new instrument termed as a medium-term lending facility for liquidity injection worth ¥769.5 billion in the last two months.

“The downward pressures and China’s potential exposure to global risks in may increase somewhat over a certain period of time during the course of economic restructuring,” the central bank said in its third-quarter monetary policy report.

The central bank said it will promote steady economic growth and also keep liquidity on the check.

The bank also pledged to make changes in policies, use various monetary tools to adjust liquidity, and promote growth in credit and social financing.

Louis Kuijs, the chief China economist at Royal Bank of Scotland told the South China Morning Post that, “Monetary policy will continue to be supportive of growth, however, as long as growth does not fall much further from the rates seen now, I expect the PBOC to abstain from general, high-profile measures.”

The recent collapse of the Baoshang Bank has also put pressure on the central bank. As a response, the central bank pumped around ¥ 600 billion into the system.

Economic growth slowed to a 28-year low of 6.6 percent in 2018.

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