Although China has taken a stance of being against the use of cryptocurrencies, especially bitcoin as it doesn’t acknowledge it as an official method of payment. However, the country is beginning to realise that the acceptance of cryptocurrencies is inevitable, and is only a matter of time before it becomes a lot more widespread.
The Chinese central bank, the People’s Bank of China recently expressed their thoughts on virtual currencies like bitcoin exclusively in a press conference that took place at the National People’s Congress. A representative from the central bank, Zhou Xiaochuan recently stated that the initial regulations will depend on certain trials as well as rolling out new technology, in order to help with the regulations.
There is extensive research being carried out by the Chinese central bank in order to fully understand how virtual currencies will be able to integrate themselves into the Chinese economy. Xiaochuan has stated,
“Issuing digital currency does not depend on a technology application, but on the ability to reduce the costs and improve the convenience of retail payments. The bank will also consider privacy and security in its actions concerning cryptocurrency.”
Xiaochuan has accepted the fact that the rise of virtual currencies and the implementation into society is inevitable, and also accepted that they would likely replace fiat currencies in the future. He mentions.
“Virtual currency is not integrated with existing financial products or the spirit that finance serves China’s economy.” With the reason, he is extremely cautious when it comes to the chinese government surging into virtual currency. He wants to avoid launching speculative products, explicitly referring to the explosive rise of bitcoin, which would have an effect on countless monetary policies and the stability of the economy.
What the Chinese central banks must do is find a way to successfully implement virtual currencies into their monetary policy, as way to monitor and regulate the assets. In order for people to be able to expand the financial capacities, an acceptance of cryptocurrencies is a step in the right direction but the government must find a balance between their people and the emergence of cryptocurrencies.
We have seen other countries accept bitcoin as an official payment method, as well as major companies like expedia, which has opened up a whole new revenue stream. But what the communist country wants, is control and this is why it cannot accept bitcoin and other cryptocurrencies as genuine payment methods, as it gives people the freedom to pay for goods and services with alternative and private methods. The chinese government and central bank have a lot of work on their hands and must work together to figure out what is best for everyone.
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