China set a strict ban on digital currency trading back in September of last year, but the country has reportedly been steadfast in investigation efforts to figure out how to utilize the distributed ledger technology to create a state-backed alternative currency.
Earlier this month, Zhou Xiaochua, who has now stepped down from his role as PBC governor, stated in a press conference that, “It is safe to say that the digital currency is inevitable due to technology development. In the future, the use of traditional banknotes and coins will shrink or even disappear one day. There is such a possibility.”
The PBC will remain focused on its study of digital currency and electronic payments, with plans to enter the testing phase when ready. Zhou emphasized that cryptocurrency should promote convenience, cost effectiveness, efficiency, safety and privacy protection within the retail payment system.
Alternatively, he believed some technological applications have become purely virtual asset transactions, which need to be firmly handled by regulators. He explained, “From the perspective of the government policy, virtual asset transactions conflict with the principle of financial products and services serving the real economy”.
In response to the decision to cease trading between Bitcoin and RMB, he shared, “We don’t favor creating speculative products that give people illusion of becoming rich overnight. That is certainly not good. The emphasis should be on serving the real economy.”
Yet, many Bitcoin supporters hope that the new central bank governor, Yi Gang, will initiate a change to the current stance on the virtual coin, pointing out positive comments he has made, referring to the digital currency as, “inspiring” and “enlightening”.
It will be interesting to see what China comes up with, if anything, and how it will be received.