“The transparency of economic activities in every corner in the country will significantly improve,” Duan said. This is revolutionary.”įor the PBOC, using blockchain, the technology that underpins the digital currency bitcoin, will allow it to trace transactions and collect “real-time, complete and authentic” data to compile precise monetary indicators such as money supply growth, OKCoin’s Duan said. Blockchain will change the whole infrastructure. “There’s a potential you can pay anybody in the system, any bank, and any merchant directly. “Cutting costs is an obvious benefit, but the impact of shifting to blockchain-based digital money from the current payment structure goes beyond that,” said Larry Cao, director of content at the CFA Institute in Hong Kong. In the meantime, there’s been strong advocacy from senior officials, including Fan Yifei, one of the PBOC’s deputy governors. In January 2016, the PBOC said it will have its own cryptocurrency “soon,” but there has still been no formal start date announced. OKCoin is among cryptocurrency exchanges that has recently taken steps to halt bitcoin withdrawals amid efforts to clamp down on capital outflows.
Issuing digital currency will make it easier for the PBOC to monitor risk in the financial system and track transactions economy-wide, he said. “Getting to know more precisely how much banks lend, where the money goes and the pace of credit creation is key to curbing money laundering and making monetary policy more effective,” said Duan Xinxing, vice president of Beijing-based OKCoin Co., one of the country’s biggest bitcoin exchanges. At Lunar New Year gatherings, money is exchanged via a few presses on a smartphone instead of crisp notes handed over in red envelopes.Īll of that poses a challenge to the PBOC’s status as the central bank of both the digital and physical realms.
To buy a can of Coke, thirsty commuters scan QR codes on their smartphones rather than feed coins into a vending machine. And since currencies have historically been issued by the state, not private players, it doesn’t want to cede the cryptocurrency space to companies it has no control over.Ĭhinese people have embraced online payments for just about everything. It doesn’t want a bitcoin bubble to blow up.
That’s taking it a step closer to becoming one of the first major central banks to issue digital money that can be used for anything from buying noodles to purchasing a car.Īt the same time as it builds up its own capabilities, the PBOC is increasing scrutiny of bitcoin and other private digital tenders. Meanwhile, Bloomberg reports China Is Developing its Own Digital Currency.Īfter assembling a research team in 2014, the People’s Bank of China has done trial runs of its prototype cryptocurrency.
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