Several central banks have shown interest in launching their own digital currencies and People’s Bank of China (PBoC) is at the forefront of this movement. The PBoC recently held a meeting that examined the benefits and challenges of applying blockchains and distributed ledger technology to improve China’s monetary and social systems.
Zhou Xiaochuan, head of the PBoC, was recently interviewed by Caixin Weekly, and his comments shed some light on why the PBoC is so interested in various digital currency technologies.
According to the transcript provided by Caixin Online, Xiaochuan views digital currencies as a necessity in an increasingly tech-oriented society.
“With the rapid development of the Internet and the significant changes in the global payment systems, it is necessary to establish the issuance and circulation system of digital currency, which will help build the financial infrastructure and improve the quality and efficiency of the economy.”
However, the governor believes that government-issued digital currencies will be different from the current breed of cryptocurrencies such as Bitcoin. Xiaochuan believes that central banks should remain in control of the issuance of state-backed cryptos. He also mentioned that these new digital currencies should have various mechanisms implemented that will prevent money laundering and terrorist financing, “The issuance, circulation and transaction of digital currency will follow the same management principles of traditional currency.” said Xiaochuan.
While the PBoC’s meeting on blockchain technology – which was held on the 20th of January – concluded that distributed ledger-based systems can improve China’s financial infrastructure, Xiaochuan said that blockchains may not be up to the task, at least in their current form:
“But so far block chains have consumed too many resources, including both computation and storage resources, and cannot handle the current transaction volume. We need to wait and see whether this problem can be solved in the future.”
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