China developing a digital currency: report
PBoC governor says the development of digital currency is an inevitable technological enterprise.
China’s central bank is reportedly developing its own digital currency, purportedly titled Digital Currency for Electronic Payments (DCEP), according to the People’s Bank of China (PBoC) governor Zhou Xiaochuan.
During one of his final public appearances as PBoC governor, Xiaochuan said that DCEP may utilize blockchain technology or it might employ existing electronic technology, meaning it won’t necessarily be cryptocurrency.
The original report was broadcast by Chinese news channel CCTV-13 and published via Ifeng News.
A rough translation of this latest speech by news publication Trustnodes reveals that, although China cracked down on cryptocurrency exchanges and initial coin offerings (ICOs) in 2017, the PBoC has coordinated a number of State Council approved research activities in relation to digital currency and electronic payments.
“The development of digital currency is the inevitability of technological development. In the future, the scale of banknotes may gradually shrink, even for a while… In 2017, the People’s Bank of China organized research projects on digital currency and electronic payments, which were approved by the State Council… This is a research and development plan. The digital currency will go to the testing stage after a certain degree,” he said.
Xiaochuan added that the PBoC began running seminars on digital currencies three years ago, establishing the Digital Currency Research Institute in June last year with a focus on convenience, speed and retail costs.
The ban on cryptocurrencies and ICOs isn’t surprising, considering the PBoC’s precautionary methods.
“From the central bank’s point of view, inadvertent products are stopped first, then promising products are tested and certified for further promotion,” Xiaochuan said.
“Therefore, the central bank’s approach was to stop ICOs at the end of August last year. Later it did not support bitcoin and renminbi transactions, and there was a bitcoin-like virtual currency as a payment instrument. Currently, the banking system does not accept or provide related services.
“In terms of future supervision, we feel that it is dynamic and depends on the degree of endurance of the technology. It depends on the results of local tests. Therefore, it remains to be seen.”
Despite being home to the largest cryptocurrency mines in the world, China has an unfavorable view of crypto. Virtual currencies aren’t considered legal tender and banks are banned from holding and distributing them.
Last month, the PBoC escalated its crypto ban by prohibiting local access to international digital currency platforms. In January, the central bank instructed local financial institutions to cease providing cryptocurrency services, including the prevention and suspension of payment channels used for digital currency settlements.
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