“Central Bank Credit Should Be the Basis for Digital Currencies” Chinese Central Bank
A leading fintech official at the People’s Bank of China points to the need for greater research into the development of digital currencies, referring to them as the “cornerstone of the digital economy.”
In the forward to his new book “Digital Currency Preliminary Investigations” (数字货币初探), Yao Qian (姚前), the head of the PBOC Digital Currency Research Institute, writes that the central bank has high hopes for the future of virtual money.
“Several years ago when we first began to conduct research into digital currencies, which was when a cold and marginal field, a number of people had their doubts about the necessity of this research,” wrote Yao.
“As a researcher, while I believe that bitcoin is just a form of private digital currency, I hold strong hopes for the future of the digital currency technology that it represents.
“The average person has just two basic demands of money – one is that it cannot be forged, and the other is that its value cannot the eroded. Irrespective of whether it’s private digital currency or statutory digital currency, those two demands are essential.
In the forward Yao argues that central bank credit serve as the best foundation for supporting the value of digital money, pointing to the problem of a lack of underlying assets for existing forms of blockhcain-based cryptocurrencies such as bitcoin.
“Looking at overall matters from an optimum perspective, we believe that central bank digital currency will naturally be capable of better satisfying the demands of the public with respect to money.
“The term ‘central bank digital currency’ has already become one of the most important topics at international meetings of central bankers
“Digital currency can be considered the cornerstone for the development of the digital economy, and the private sector has already taken the lead and conducted tests into the conversion of physical money into digital currency…central banks must endeavour to catch up.”