Only Digital Currencies Created by Government Will Be Legal Tender: Li Daokui

One of China’s leading economic experts contends that only the government will be responsible for the creation of any digital currencies that obtain legal tender status in future.

Speaking at the 2017 Davos forum, Li Daokui, Mansfield Freeman Professor of Economics and Director of the Center for China in the World Economy at Tsinghua University, said that in his opinion virtual currencies such as Bitcoin are more akin to financial assets as opposed to legal tender.

“Fluctuations in the value of bit coin are extremely large,” said Li. “It’s now become an object of speculation, so is unlikely to become a form fiat currency.

“If it becomes a currency and the currency value fluctuates this much, who would be willing to use it?”

According to Li who issues digital currency is a matter of vital importance as it relates to monetary policy, and macroeconomic performance is determined by the supply as well as velocity of money.

“In future the People’s Bank of China will take the lead in the creation of statutory digital currency.”

Li also weighed in on the issue of Moody’s recent downgrade of China’s sovereign credit status, stating that the analysts behind the decision have no understanding of the country’s economy, and that the rating cannot be considered accurate.

 

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