Digital Currencies Should Be Led by the Central Banks

Digital Currencies Should Be Led By Central Banks According to Fan Yifei

Digital Currencies Should Be Led by the Central BanksFan Yifie, the People’s Bank of China’s Vice Governor speaks about creating their very own digital currency. He believes that it will help them supervise digital currencies and make the most of it. The Vice Governor states that in order for them to discuss the challenges that digital currencies are facing today and how to supervise it, they must know it first hand. With that, they will be able to know how it feels like to maintain its financial stability. They will also need to know how they will going to innovate it and what kind of supervision is proper with regards to the issuance of the new digital currencies and their circulation.

Now that people have wide access with the internet and the encryption technology is getting better, this shows that time is right for the digital currencies. This online currency can reduce the costs of operation yet can increase the efficiency and give way to a wide range of fresh applications. Even DC is not widely accepted, credibility is weak and it is not perfect yet, the Vice-Governor  proposes that PBOC can lead the way in making it better.

If Central Banks will issue Digital Currencies…..

Digital Currencies Should Be Led by the Central BanksIf digital currencies will be issued by banks as a legal tender, it can solve many digital currencies glitches, but before that, the bank must face the present challenges it is facing today. Fan has two suggestions:

  1. The central bank will be the supplier of the digital currencies to the market and then they are the one who will take care of the process from the issuance to circulation until to the maintenance services.
  2. They will adopt the paper currency model which means the bank of the nation would issue the DC to the commercial banks which will give the public withdrawal and deposit services while these institutions will be hand in hand in maintaining the circulation and issuance of the digital currency.

The PBOC Vice-Governor said that they are considering the option number 2 since the system they have now will help them make an easier shifting for legal digital currencies to replace the traditional money eventually.

Zhou Xiaochuan, PBOC Governor have spoken to Caixin Weekly, earlies this year and said that cash and digital currencies will co-exist in a long period before digital currency finally replaces the fiat money.

PBOC no plans in launching Digital Currencies yet….

Digital Currencies Should Be Led by the Central BanksFan make it clear that although the PBOC is interested in the effectiveness and safety of the new technology and its method, they don’t have plans to launch digital currency of their own, yet.

According to Zhou in his previous interview, the PBOC goal is to issue a digital currency as a replacement to the traditional cash in order to lower the issuance cost and the traditional money circulation and to increase convenience.

Even though the central bank has no plans as yet to launch their own digital currency, the fact that they are doing an intensive research on technology behind digital currencies is enough proof that they are serious about applying the new currency in China’s economy in the future.

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