China studying blockchain application for forex

SHANGHAI: China is studying the application of blockchain and artificial intelligence in cross-border financing with a focus on risk management, and will further liberalise its capital markets, a senior foreign exchange regulator said on Sunday.

The comment by Lu Lei, a deputy head of the State Administration of Foreign Exchange (SAFE), comes as Facebook’s plan for its Libra digital currency project stirs global interest in the sector.

Lu said that amid heated discussions around Libra globally, SAFE is promoting the application of financial technology and artificial intelligence (AI) in cross-border trade finance, as well as in macro prudential management.

“We need to pay special attention to the rapid development of digital finance and fintech,” Lu told a forum in Shanghai. “When we are not entirely certain where a (new) form of business is heading, we must pay attention to risk management.”

Facebook’s digital currency ambition is causing alarm among central banks around the world, amid concerns over its threat to the global monetary system and implications to data privacy and money laundering activities.

China’s parliament on Saturday passed a new law on cryptography, as the country gears up to launch its own digital currency.

Lu said that the basis of risk management is the setting up of an effective financial infrastructure, proposing that Shanghai, China’s financial hub, embrace digital technology as it beefs up its systems in payment and settlement.

Lu also vowed to further open China’s capital markets, including bond markets, with plans to consolidate investment channels for foreign investors, he said.