Game of Fiat Digital Currency and Non-fiat Digital Currency Has Commenced, Says Expert of China’s Central Bank
“Private digital currency cannot be allowed to develop by themselves disorderly. All countries around the world have shown interest in digital currency endorsed by central bank, but there is not decisive central bank digital currency yet.”
Said Yang Fan, a member of the central bank’s blockchain financial expert group, Facebook’s 700 million users are enough to shock the foundation of any central bank and its legal currency operation. Therefore, any country should speed up the pace of launching the digital currency endorsed by central bank.
According to the latest survey jointly released by IBM and OMFIF, the first central bank digital currency is expected to emerge from a small economy in the next five years and respond to a specific policy goal with a clear purpose. (The survey, which started in July 2019 and lasted for three months, involved central bank officials from 13 developed economies and 10 emerging markets) 73% of the respondents expressed their support for the central bank’s digital currency and believed that in some cases, the central bank’s digital currency would be a good alternative to cash.
Yang said that the reason for the launch of fiat digital currency is that the private digital currency uses a series of new technologies, which have strong penetration into the financial system and even impact on the operation of modern economy and finance. Therefore, in order to maintain the stability of the monetary system and even the whole financial system, monetary authorities must adopt the same or more advanced technology to study the fiat digital currency.
“If the private digital currency is allowed to develop disorderly, it will bring serious impact on the monetary authority’s policy regulation and financial system. In addition, the sharp decrease of cash is another motivation for the central bank to issue digital currency.”
In addition to the technical assistance, the issuance of central bank’s digital currency also needs a sufficient framework to ensure governance and risk management, ensuring its healthy development.
Yang believes that it is very disadvantageous for the stability of economic development to weaken the position of legal currency and the role of monetary policy. It remains a question that whether the central bank’s digital currency serves national monetary policy, global monetary policy, or pure monetary stability policy.
Both fiat digital currency and non-fiat digital currency are cryptocurrency, among them are different algorithm games. Private digital currency is issued by computer algorithm, so the issue of private digital currency such as bitcoin is not decided by the central bank, but ultimately decided by social consensus. Whether the algorithm of the central bank to create digital currency can stabilize the value of fiat currency remains to be explored.