China’s central bank reported ‘developing its own digital currency’
China’s central bank is”conducting research” with an eye towards issuing its own sovereign digital currency, even as it has cracked down on the use and exchange of bitcoin and other cryptocurrencies, the South China Morning Post has reported.
The move is “in parallel with similar efforts ongoing in Russia”, the SCMP notes in its story, which the Hong Kong-based publication published online on Sunday. AT the same time, it is also a “stark contrast to the central bank’s harsh and relentless crackdown on any form of privately issued, or decentralised digital currency”, the SCMP points out.
The article quotes Yao Qian, who heads up research operations at the People’s Bank of China (PBOC), China’s central bank, as noting that some of the attractions of having a digital legal tender is that it can help to bring down transaction costs, make it easier to extend financial services to rural areas, and increase the efficiency of monetary policies.
“The development of [a] digital economy needs central bank-issued electronic currency more than ever,” Yao said during a Saturday forum in Beijing, according to the SCMP.
“It’s crucial to speed up the research and issuance.”
As reported in September, a series of announcement by China that it was cracking down on bitcoin and on so-called initial coin offerings, or ICOs, which make use of cryptocurrencies to finance businesses caused the price of bitcoin to tumble 20%, although the fall proved to be temporary, and the best-known cryptocurrency soon soared to record levels – US$7,334 per coin – at or near which it currently remains.
Even before September, Chinese financial institutions had been prohibited since 2013 from holding any form of digital currency, and the freedom of individuals to own bitcoin is “rapidly shrinking”, the SCMP article points out.