Experts Urging China to Issue its Own Digital Currency. Huang Zhen is a prominent researcher from the Central University of Finance and Economics and he has been one of the rare people who urged China to move away from banning digital currencies and to enter the market with their own digital currency. He recently published an article in which he called upon the People’s Bank of China to issue their own cryptocurrency as soon as possible and to become a country that would have a state-backed cryptocurrency.
His recent paper was published in People’s Bank of China Financial News and considering the attitude that this financial institution has displayed towards cryptocurrencies, it is really surprising to see this article in the official newspaper of this institutions. He called upon the Bank to issue cryptocurrency in order to keep track with the rest of the global financial market because he believes that globalization is very important and that China would be left behind if they ban Bitcoin and do not issue their own cryptocurrency.
Other Countries Looking into this Option
In other countries none of central banks have issued state-backed cryptocurrencies, but the fact is many of those central banks are thinking about it, and they are spending a lot of time and efforts researching this issue. Moreover, the Central Bank of the United Kingdom has been said to have plans for issuing their own cryptocurrency and that they might do it very soon. Several other countries, including Estonia, are very close to actually doing that. Apart from these countries, it was reported recently that India is also preparing their cryptocurrency and according to those reports they already have a name for that cryptocurrency and it will be called Lakshmi.
When it comes to China and cryptocurrencies, it needs to be mentioned that the country has already established the national cryptocurrency research institute. Just last year, that institute was stating that their team should identify the objectives of the China’s Central Bank and help the Central Bank to issue their own cryptocurrency. However, in the last month, the situation with cryptocurrencies in China has gone from bad to worse.
Is State-backed Crypto a Viable Solution?
Chinese authorities have first completely banned Initial Coin Offerings and only several days after that announcement, it was reported that Chinese authorities might also be banning all cryptocurrencies. As a result, China’s biggest cryptocurrency exchange has decided to close and they will not be providing their services from the start of the next month.
Many experts agree that if a certain country would issue state-backed cryptocurrency, that cryptocurrency would be a lot different than the rest of the market. Besides being state-backed, that cryptocurrency would also be controlled by the state or rather by the central bank of that state. On the other hand, other cryptocurrencies currently in the market do not have that kind of control and that is one of the reasons why they have become so popular. Besides that, another issue that worries many experts is the fact that those kinds of cryptocurrencies will have unrestricted inflation which is also something that other cryptocurrencies do not have.
All in all, it will be interesting to see whether this publication would have any effects on the People’s Bank of China and their policies and positions towards cryptocurrencies.
Written by Ivan Potocki