As per the deputy head of the State Administration of Foreign Exchange (SAFE), Lu Lei, China is looking forward to explore blockchain and Artificial Intelligence (AI) for enabling cross-border financing. In addition to the exploration, the emphasis is laid on risk management.
The deputy head of SAFE continued that the organization aims to promote the use of AI and blockchain in cross-border finance and further in macro-prudential management. Speaking in Shangai at a forum Lei said:
We need to pay special attention to the rapid development of digital finance and fintech. When we are not entirely certain where a (new) form of business is heading, we must pay attention to risk management.
After Facebook announced its crypto endeavor, Libra, the central banks of various countries stood up against Facebook’s crypto project. Consequently, heated discussions encompassing Libra started globally because central banks of different countries were alarmed.
The banks considering Libra a threat to the current financial and economic system became concerned with mainly data privacy issues and money laundering activities that Libra could promote. However, despite the increasing tension and debate involving Libra, Lei views blockchain and AI important for the fintech world.
Therefore, embracing innovative technology, Lei further vowed to open up the Chinese capital markets, including bonds, while simultaneously planning to consolidate investment channels for foreign investors. Moreover, Lei concluded that effective financial infrastructure serves as the basis of risk management.
China passing a crypto law in the near recent is only looking forward to capitalize on the best offered by the technology. Following the crypto law devised by the Standing Committee of the 13th National People’s Congress, new standards for the application of cryptography and the management of passwords were laid by the country.
The standards and rules outlined in the cryptography law will come into effect on 1 January 2020. Comprised of about 44 articles, Article 1 of the crypto draft explaining its purpose reads:
This Law is enacted for the purpose of regulating password application and management, promoting password development, safeguarding network and information security, protecting the legitimate rights and interests of citizens, legal persons and other organizations, and safeguarding national security and social public interests.
China, among other things, is also a mining hub of bitcoin miners. The country has been trying to gain the positives of the technology so let’s see how successful Lei can be with his contribution while utilizing blockchain for cross-border finance.