One of the biggest and most important banking institutions in the world, the PBoC or the People’s Bank of China is apparently speeding up its development of an in-house digital currency. This comes as one of the bank’s top research figures underlined that the country has to get its cryptocurrency. Not only that, the same figure underlined that this has to happen as soon as possible.
These are strong words from otherwise very hermetic and slow-moving financial giant that is supplying the capital network needed for the biggest economy in the world. At the same time, the statements are very telling of a new approach that the country is taking in its effort to become something new in the economic and financial sense.
But for now, many from the cryptocurrency domain are carefully following where will the PBoC digital currency reveal leave their ventures both in the eyes of the consumers and the regulators. But, for now, many more are wondering what will the new currency provide to the population and their changing lifestyles. In a year that has so far shown many changes related to the Chinese public and its relationship with digital services, looks like the PBoC will soon add a new exciting element to the mix.
A Crucial Step
The news about this national digital currency came as a PBoC researcher stated that it was a crucial necessity that China gets its bank-issued digital currency in the smallest possible time frame. This was reported by the South China Morning Post who cited Yao Qian as the researcher who is heading the cryptocurrency division.
He explained why legal digital tender was so important on a forum taking place in Beijing. According to Qian, the move would provide the cost of transaction services and also expand the reach of FinTech institutions in the rural area.
Aside from this, the move would be helpful in boosting the efficiency of the monetary policies defined by the PBoC. Any of these could help not only the Chinese central bank but also the end users as well, especially those who live outside of the big population centers.
But, when all of these factors are bundled up together, they could be the biggest economic change for the ordinary citizens since the late 1970’s and the reforms provided by the Deng Xiaoping leadership. There is a certainty that these would be something that the entire political and social system in the country would welcome.
The PBoC Development
Qian stated that the development of the digital economy demands a bank-issued central electronic currency. While this is not something that is so far factual on a global level, being that many economies function with their digital aspects and without a bank-issued digital currency, the statement points towards a visionary approach.
In fact, Qian said that a digital currency like this would be a jewel in the crown of the FinTech industry. This would be particularly true for China, where the development scene of the non-governmental digital currency projects was often hampered by government oversight.
Unlike other digital ventures, including native social media, eSports platforms, and many more similar examples, cryptocurrency development was seen as risky. The only exception to this rule was the abundance of cryptocurrency mines that still make up the majority of the hashing power in bitcoin and many other networks.
When these statements are combined with reports that have indicated that the PBoC is already working on trials for its digital currency, there can be a high level of certainty that some national Chinese cryptocurrency is on its way. The form in which it will appear and the exact users are not known, but a lot of analysts believe that is will appear soon, most likely before the end of 2018.
The Chinese Digital Currency Environment
All of this comes along with a string of otherwise not so reassuring news related to digital currencies. Recently, the government banned any initial coin offerings or ICOs which left a deeply negative impact on the ethereum network and its market cap.
After this occurred, the government regulators decided to shut down the cryptocurrency exchanges operating in the country, which was before that one of the main users of digital currencies. The closure came gradually, as more and more exchanges were placed under the spotlight and then restricted.
While this unraveled, some noticed that a similar trend was already showcased in the country with different innovations that strongly impact the public sector. At first, the government would allow some phenomena to unravel in a completely free manner, even to the edge of chaos for many observers.
Then, it would allow its regulators to swoop in and shut the whole thing down, driving it to a point where many believe the same industry or field will never recover in China. But, as time slowly passes by, the regulation becomes looser and the field is once again allowed to catch its breath and then continue to function.
The new regulation stays in place, but as Chinese governments after Xiaoping understand perfectly, business needs to keep churning profits for the system to function. This means that anything that is not directly subversive to the government or exceedingly harmful to the public will most likely be allowed to function in the hybrid capitalist market that is China.
The Chinese Growth
There is a clear path that the current Chinese leadership wants to take. The last party congress was used to communicate this path and it consists of a stabilization effort for the lives of the population, followed by a new level of international asserters.
The digital currency issued by the PBoC would benefit the first element, mainly because of the fact that the rural population struggles with basic western services, like money transfers. A digital currency with the stamp of approval from the government would be able to do immense improvement here, especially because in China, like everywhere else, mobile devices are present even in the most remote areas.
With digital currency at their fingertips, Chinese citizens in these parts could attain funds in a simple and easy manner. This would then surely result in more fringe economic growth and more improvements in their everyday life.