China Doesn’t Need Legal Digital Tender, Central Bank Advisor Says

China Doesn’t Need Legal Digital Tender, Central Bank Advisor Says

Song Yikang

Date: Mon, 06/04/2018 - 12:04 / source:Yicai
China Doesn’t Need Legal Digital Tender, Central Bank Advisor Says
China Doesn’t Need Legal Digital Tender, Central Bank Advisor Says

(Yicai Global) June 4 -- There is no need for China to issue legal digital currencies, according to a leading scholar at the country’s central bank who believes bitcoin is utopian and virtual currencies are not currencies.

“Bitcoin seeks to denationalize currencies,” Sheng Songcheng, an advisor to the People’s Bank of China and former head of the bank’s statistics and analysis department, said at the China Financial Innovation Forum on June 2. His speech echoed his words at the Boao Forum for Asia in April, which slammed blockchain’s place in the financial world.

Bitcoin and blockchain are buzzwords in the fintech field, but digital tenders which use blockchain are not real currency as they don’t meet the basic conditions required to be so, he added, pointing out bitcoin’s limited quantity and volatile value.

Currencies must also be issued by the state, he continued, saying no government would abandon monetary policy for the foreseeable future and would only strengthen it.

“Major countries have all rejected virtual currencies as tender”, he added. “There seems to be no need for central banks to issue a so-called digital legal tender. Existing payment systems are safe and convenient. Digital currencies can track fund movements, but e-money can also do that.”

The framework for the circulation of legal tender is yet to be determined, and this problem cannot be solved just technically, he added. “Issuing digital currencies involve very high implicit and explicit costs. Some issues not only fall under the category of finance, but also have implications for the whole of society.”

Editor: Emmi Laine

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Keywords: Bitcoin, Digital Currencies, Virtual Currencies, central bank, pboc