The news of the announcement of a Chinese cryptocurrency by the governor of the Chinese Central Bank (PBOC) seems to start to have some confirmations. During the press conference, Zhou Xiaochuan answered a series of questions, some of them on cryptocurrencies. In reality we speak generically of "digital coins", but it is clear that we refer to exclusively digital coins, and based on Distributed Ledger Technology (DLT), then Blockchain or similar. Zhou first specified that the name used by central banks for these coins is "DC / EP", where DC stands for digital currency (Digital Currency), and EP for electronic payment (Electronic Payment).
Then he said: Studying the digital currency does not mean that money is used to obtain the application of a specific technical solution, but essentially the pursuit of convenience, speed and low cost of a retail payment system. We must also consider security and protect privacy. This can be based on blockchain or distributed accounting technology DLT [distributed ledger tochnology] or technologies that have evolved from existing electronic payments. It must be said that the development of the digital currency is not only an inevitability of technological development: in the future it could be that the traditional forms of paper money and coins will gradually decline, and may even no longer exist one day.
Therefore a first key point is that, according to Zhou, digital coins are meant to replace traditional ones, and this said by the governor of the Chinese Central Bank sounds like a commitment to develop digital fiat coins.
In fact he added: Throughout the process, we should pay attention to global financial stability, risk prevention, while the digital currency as money is interesting, in order to ensure that the monetary policy transmission mechanism of financial stability policies, and to protect consumers. There are some technical solutions that can lead to excessive risks and cause losses for consumers in case of problems. In particular, for the economies of large countries, we must avoid such substantial and irreparable losses, so we must be careful. In this process, we must go through extensive tests and local tests. After it will be reliable, we will promote it.
At this point if the Central Bank is testing it probably means that it is working to develop its own digital currency (or "state cryptocurrency"), and if it really promotes this currency in case of positive tests, then the news of a cryptocurrency Chinese starts to be something real. The fact that the project started already in 2017, and has the approval of the Council of State, sheds new light on the behavior that China has recently maintained towards the cryptocurrencies ...
Then he concludes by saying: Everyone can also see on the market that digital currency has caused much discussion in some respects and that there are also many risks: prices have seen many fluctuations. The main reason is that there are some technical applications that do not focus on the application of the digital currency in the retail payment, but have moved on to virtual goods transactions. We believe that we must be more careful in the virtual activity of negotiation, of virtual asset exchange. From the point of view of China this is not in line with our financial products and financial services at the service of the direction of the real economy. Thus, throughout the process, one should not be too anxious, but work with constant development, and orderly conduct the test, seize the direction, to emphasize the financial services for the real economy, improve efficiency, reduce costs, avoid that a product becomes an excessive speculation. Right now we have presented to everyone the current research and development plan, which will enter the test phase when it will be developed to a certain extent. This is what I can say now.
However, he also added: Before investing in the real operation, it is necessary to consider the relationship with the consumer and the relationship with the investor. Therefore, if the test is not sufficient or if the test results are not widely recognized, rapid expansion may cause some problems. Therefore, from the point of view of the Central Bank, the first is the involuntary shutdown of products, and some promising products must also be tested, certified and, in fact, more reliable to be promoted later. Therefore, we have noticed that our central bank's practice was to stop the ICO at the end of August last year, so we followed closely the direct transactions between Bitcoin and Renmimbi.
So it is possible to officially state that China is testing its possible state cryptocurrency, but until the end of the tests it is not possible to state with certainty that it will actually be launched on the market.
We'll wait and see,
Musclenerd ;)