A prominent Chinese researcher has urged the People’s Bank of China (PBoC)–the country’s central bank–to adopt a state-backed digital currency “as soon as possible.”
Huang Zhen, a researcher at Central University of Finance and Economics, published this recommendation in the PBoC’s own Financial News.
After providing a survey of the PBoC’s recent steps to crack down on initial coin offerings (ICOs) and bitcoin exchanges, Huang says he expects the bank to launch its own “sovereign digital currency under the auspices of the central bank as soon as possible,” according to a rough translation. He states:
After this round of virtual money market…supervision, we expect to launch our own sovereign digital currency under the auspices of the central bank as soon as possible…to continue [to] lead the development of global digital finance as soon as possible into the era of globalization.
Indeed, this would not be altogether surprising. Although no central bank has officially issued a state-backed digital currency, many are researching it. On Monday, CCN reported that the central government of India had discussed issuing a state-backed digital currency, perhaps named “Lakshmi” after the Hindu goddess of wealth and prosperity.
Also on Monday, the Bank for International Settlements (BIS)–the central banks’ central bank–published a 14-page report discussing the forms that these “Fedcoins” could take. The BIS concluded that while state-backed digital currency debates are most pressing in cash-adverse nations such as Sweden, “all central banks may eventually have to decide whether issuing retail or wholesale [sovereign cryptocurrencies] makes sense in their own context.”
On its part, China has already established its own digital currency research institute, and Huang’s comments echo those issued by the PBoC last year:
The digital currency team….should clarify the strategic objectives of central bank digital currency issuance, thoroughly research key technologies, research various applications for digital currency to help the central bank introduce a digital currency, as soon as possible.
Of course, a sovereign cryptocurrency would look quite different from bitcoin and its other decentralized forbearers. To wit, it would almost assuredly retain some of what many in the cryptocurrency community consider to be the most odious characteristics of fiat currency: centralized control and unrestricted inflation.