Can China’s central bank mint an answer to bitcoin?
For Beijing, the challenge is determining how to regulate cryptocurrency without compromising the central bank’s interest in digital money
The love-hate relationship of China’s central bank with digital money shows no signs of resolving soon, as investors continue to back the industry leading bitcoin while Beijing lays the foundation for its own sovereign cryptocurrency.
The technological underpinnings of an electronic currency hold a strong allure for a government struggling to keep a tight grip on capital outflows, but that same technology makes digital money resistant to centralised control, industry experts say.
The People’s Bank of China (PBOC) is struggling to maintain some rhetorical consistency. Bank governor Zhou Xiaochuan said in February last year that a digital currency must be issued by the central bank and the PBOC had been pouring money into the study of “blockchain” technology. Following two years of research, the bank had devised a test of its own digital currency and by the end of last year had set up an in-house research institute headed by a former deputy director at the bank’s technology department.
In a recent speech, Yao Qian, a PBOC official who heads the research institute, called for “prudent tolerance” towards regulating the virtual currency industry while speeding up the issuance of its sovereign digital currency.
