Back in September, the financial regulatory bodies in China had a major crackdown on ICOs and cryptocurrency trading by asking all the local exchanges to shut down their operations with immediate effect. Such a decision coming from China, a country that contributed to major bitcoin trading volumes, was received with pessimism and the Bitcoin slipped below $4000 soon after. However, the markets were quick to recover later and since then bitcoin has convincingly grown over 80% in valuations sending a message that it can sustain with strength even without China.
Also Read: Bitcoin Growing Stronger Even Without China
Now it seems that China has too understood this fact and the importance of digital currencies in future. Earlier this week, Yao Qian, director of the PBoC Digital Currency Research Institute and Deputy Director of the PBoC’s Science and Technology Division talked about the importance of a centrally-backed cryptocurrency in the shifting economics of digital currencies.
Yao said “digital economy needs central bank-issued electronic currency more than ever. It’s crucial to speed up the research and issuance.”
Last month in October, Yao Qian published a paper in Tsinghua Financial Review (Chinese), which highlights the idea of absorption of digital currencies through the conventional and existing financial infrastructure. Moreover, earlier in June 2017, the MIT report suggested that the People’s Bank of China has plans to introduce a Chinese digital currency alongside Renminbi. The reports talked about many potential benefits of bringing the digital currency like reduced fraud and counterfeiting, lower operating cost, increased transparency, diminished corruption and real-time information for policymakers.
Two months back in September 2017, deputy governor of PBoC – Fan Yeifei wrote that the central bank is working to supervise private cryptocurrency and develop a digital ledger. He wrote :
“The PBOC must carefully consider how to maintain financial stability, encourage innovation, and properly supervise the issuance and circulation of these new currencies. It must also set up sensible institutional frameworks and macroprudential controls. With the proper safeguards in place, China’s central bank can maximize the positive effects of legal digital tender, while minimizing the negatives.”
Yeti then talked about some major issues like stable value, irreversible asset loss, accounting methods and overall effects on the financial system.
While talking to the South China Post, Yao said:
“What the central bank have [sic] in mind is a centralised digital currency among all [other currencies]. As money has evolved from the barter system to its metallic and paper forms, it is now going digital.“Virtual currency is easier to trace, allowing the central bank to monitor its velocity and the whereabouts of the money and improve its monetary policies accordingly.”
He further stated that digital ledger is the jewel in the crown of Fintech.
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