What Would PBoC’s State-backed Digital Currency Look Like?
China’s central bank has the ambition to accelerate the development of its own digital currency. Payment methods changes nowadays as digital economic develops, various mobile payment methods lead to a significant effect on the circulation and issuance of RMB. The emerging digital currency market also could bring potential threats to Chinese yuan which force the People’s Bank of China (PBoC) to pursue the research and development of the new monetary shape.
Fan Yifei, the vice governor of PBoC has put “developing China’s own digital currency” on the agenda for 2018. he also stated the monetary regulator should “keep improving the management mode of commemorative coins issuance ”.
Some of the industry experts disclose that, if the central bank launches digital currency based on blockchain, they have to keep the monetary supply within certain fixed value (to distinguish with digital fiat money). This kind of “digital currency” is actually a digital version of the “commemorative coins” which can be circulated and traded.
However, commemorative coins are quite different from currency. For example: most people would not spend a Chinese Panda 12-ounce gold 1,000-yuan coin as 1,000 RMB cash in daily life. The concept of commemorative coins may change as time flows and using a ‘digital currency way’ in the issuance is a high probability event.
Fan pointed out the monetary authorities would “rectify the cryptocurrency market and crack down on all types of virtual currencies in 2018” to protect the circulation of RMB from digital currency threats.
However, the national strategy needs to consider the global economic environment. If China keeps standing in an ego ecological perspective, its ecnomic performance would become more passive in the financial market. A lot of data shows that, the development of the digital currency market would not interrupted by any national governments. The number of people directly (or indirectly) holding digital currencies continues to rise.
Instead of strictly prohibiting digital currency trading in China, using a national digital currency to anchor other non-fiat digital currencies all over the world would bring more benefits to China’s domestic economic. China’s national digital currency would become an universal anchoring, trading and reserve currency in a short time.Theoretically, a digital version of Panda gold coin would be much more competitive than a fiat digital money in global economic market.