PBOC’s Voice: Digital Currency will Streamline China’s Poverty-relief Efforts
An official from People’s Bank of China (PBOC) expressed confidence of digital currency in combating corruption when China grants its poverty-relief funds.
Xuzhong, the head of Research Bureau PBOC’s, an agency under the direct administration of PBOC functioning as a think-tank to provide analysis and prediction of economic statistics and monetary policies, has noted the digital currency under PBOC’s research can use its traceability to help Chinses government bailout the poor precisely and effectively. Days after PBOC, China’s central bank, expressing interests recruiting talents with cryptology and information security, Mr. Xu as a government official has again made the public believe PBOC is serious about digital currency by stating, in a Summit of Financial Innovation held in Hangzhou at Nov. 26th that:
“digital currency.is based on cryptology. It will lead to effective analysis of financial data. Users of the currency can voluntarily submit their identity at front end while at back end there will be a real-name registration system. The system of the digital currency is compact, effective and traceable. I believe digital currency’s traceability can help combat counterfeit money, track the flow of government grants and subsidiaries and monitor whether the fund actually goes to the poor.”
Mr. Xu recognition of digital currency in poverty relief efforts is enlightening. In August, the Commission for Discipline Inspection of the Central Committee of Communist Part of China, CCDI, which is China’s main body to fight against corruption of party members (all government officials are party members), just revealed 8 typical and serious corruption cases related to poverty relief efforts of the central government. One case where head of prefecture of Chongqing Municipality embezzled poverty-relief fund of near RMB 3o million yuan frightens all. Though China always prides itself on its efforts of lifting more than 700m people out of abject poverty, to take care of the poor is still China’s current key task as the urbanization rate has just surpassed 50%. The problem is China’s vast territory make it hard to guarantee the implementation of the policies from the central government. As the poverty-relief funds most likely go to the rural areas where people lack awareness to protect their rights, the funds often breeds corruption. In the sense, the traceability of digital currency serves as an antidote to the chronic disease.
Besides, there are more than 1500 villages totally lacking financial service according the report of PBOC. PBOC’s digital currency reaches these remote areas where banks are reluctant to set up branches. Also, the immutable records of flow of the money will let government know in which way the fund receivers, usually the peasants tend to use the money and thus formulate better poverty relief policies.
Moreover, by tracking the flow of money, the banks will have a better credit rating data for the small-and-medium enterprises in small towns and then grants loans to them. Currently these enterprises often find it extremely hard to apply loans from banks as valuable assets are needed as mortgage based on the existing credit rating system.
Though PBOC has said it has no official timetable for “issuing” digital currency (see our article), its repeated emphasizes on multi-functions of digital currency makes people believe China is open to a decentralized currency system.