The People’s Bank of China (PBoC) is exploring the ways to launch its own digital currency, even after a recent ban it imposed on all ICOs and cryptocurrency exchanges in China.
The central bank’s lead researcher, Yao Qian, explained the importance of creating a centralized virtual currency during a forum in Beijing on Saturday. As South China Morning Post reports, the launch of digital legal tenders will help to reduce transactional costs and expand financial services to rural areas. Moreover, this will significantly improve the efficiency of the bank’s monetary policies.
“The development of digital economy needs central bank-issued electronic currency more than ever. It’s crucial to speed up the research and issuance,” Yao said at a forum.
Yao, who is a former deputy director of the PBoC’s science and technology department, now serves as the head of the Digital Currency Research Institute that was launched in China a few months ago to drive the development and research of cryptocurrencies.
The researcher believes the government should introduce its own centralized digital currency as soon as possible. The digital legal tender, he said, will be the “jewel in the crown of fintech” and will have a huge impact on the development of the current financial system.
“What the central bank have in mind is a centralised digital currency among all. As money has evolved from the barter system to its metallic and paper forms, it is now going digital,” he told South China Morning Post.
According to the researcher, virtual currency is easier to monitor, which will enable the central bank to control “its velocity and the whereabouts of the money and improve its monetary policies accordingly.” Meantime, artificial intelligence, machine learning, and big data will also play a major role in improving regulatory intervention methods and analyzing risks.
Yao’s comments are in line with PBoC’s governor, Zhou Xiaochuan, who previously confirmed that the bank was considering the introduction of its own digital currency. Earlier this year, the PBoC issued a statement which mentioned the potential benefits of launching a state-supported digital currency, including higher transparency of economic transactions and lower risk of money laundering and tax evasion.
China, meantime, is not the only state that is exploring the possibility of issuing a centralized digital currency. This September, India’s Central Bank, the Reserve Bank of India (RBI), revealed it was considering the launch of its own virtual currency. Despite numerous warnings the bank previously issued regarding the use of digital currency, it is currently investigating ways of developing government-backed cryptocurrency as an alternative to the Indian rupee.