According to a report published on 27 October, China has been studying the usage of blockchain and artificial intelligence (AI) for cross-border financing. The study, according to the report, focuses on risk management. The purpose of China’s new undertaking is to liberalize its capital markets further.
Importance of Risk Management
The finance markets around the world have been in a state of speculation and spur ever since Facebook’s Libra digital currency initiative. In such a time of increased interest in the blockchain and AI sector globally, a comment from Lu Lei, the deputy head of the State Administration of Foreign Exchange (SAFE), has shown rare foresight. In his comment, Mr. Lei reveals that SAFE is encouraging financial technology and AI for both, cross border trade financing and macro-management.
At a forum in Shanghai, Mr. Lei said that the rapid development of digital finance and Fintech demanded special attention-
“When we are not entirely certain where a (new) form of business is heading, we must pay attention to risk management.”
The Need for an Effective Financial Infrastructure
Mr. Lei further stated that risk management could be brought about by the creation of effective financial infrastructure. He also proposed that Shanghai, which is China’s financial hub, should move towards digital technology in order to make the payment and settlement systems stronger.
Mr. Lei also took a vow to make China’s capital market more open, including the bond markets, which according to him, would secure foreign investments.
China’s Blockchain Bid
With Libra promising a disruption in capital markets, China is firm on its belief that its new digital currency which is all set to be launched is going to be better than Facebook’s. The country is also taking steps to make digitalization friendlier.