Digital currency is inevitable, likely to overtake fiat Bank of China admits

Zhou Xiaochuan, the central bank’s governor, made these certain remarks relating to cryptocurrencies at this year’s National People’s Congress During his press conference, he admitted the fast growth of cryptocurrencies and spoke on how it could be better used in the country. Nevertheless, the bank is not comfortable with digital currencies like the Bitcoin and is slowly finding ways in which to regulate them as they believe digital currency is inevitable.

The Governor of the central bank made it clear during the congress that digital currency is inevitable and have a higher likelihood to replace paper money. He further noted that for effective regulations to be availed, new technologies and regional trials have to be conducted.

“The central bank is researching digital currency. Issuing a digital currency does not depend on a technology application but on the ability to reduce costs and improve the convenience of retail payments.” Referring to Bitcoin’s extensive growth, the vice governor advised that “speculative products” should be closely monitored.

Although harsh on the current cryptocurrencies, in mid-2017, the People’s Bank of China established a digital currency research institute which was tasked at developing a state-controlled digital currency to cater for an increased demand of a digital currency.

The governor’s remarks are similar to the ones issued by the same bank in early January 2016. In its earlier remarks, the central bank stated that they were looking into issuing their own digital currency in the soonest time possible.

Although China’s economy is not yet conversant with digital money it’s seeking the help of the industry to carry out research and development of a digital currency. Zhou noted that the latest crackdown on the cryptocurrencies like Bitcoin is meant to strengthen investor and consumer education and protection.

This follows the government’s move to further extend its whip on those dealing with cryptocurrencies. It even forced a popular social media platform, WeChat, to close down and closely monitor all accounts that are dealing with cryptocurrency. Especially those belonging to cryptocurrency exchanges.

This made it hard for mainland residents who traded in cryptocurrencies and used WeChat as a tool of trade. Investors were forced to rely on offshore accounts. Those who didn’t have offshore accounts preferred over-the-counter to continue with the cryptocurrency trading.