While China maintains its rigid stance towards cryptocurrencies, its central bank is looking toward developing its digital currency for public usage.
Fan Yifei, vice president of the People’s Bank of China (PBoC), recently shared an op-ed through a Chinese publication which detailed that the PBoC is considering various options to approach its plans of having its digital currency.
Ideas Presented in the Op-Ed
Fan, first of all, discredited the notion that the digital currency will be decentralized. Instead, he specifically mentioned that the digital currency would remain centralized for the bank to ensure that it has complete monitor control over it.
He also stated that having a digital currency will be able to meet the needs of the public that has had a growing interest in cryptocurrencies, while also ensuring that this digital currency does not hold anonymity or the issues that arise out of it – which was one of the reasons why China took such a stern approach towards cryptocurrencies.
He further mentioned a few approaches to the delivery system of this new digital currency, detailing that since it will not be a peer-to-peer mechanism and actually a centralized currency, it will differ from the token distribution model that has been popularized by the currently-functional cryptocurrencies.
Smart Contracts Are a Big No
Fan also spoke of smart contracts and how their function as agreements could go beyond the functions of a regular currency. He stated that since smart contracts could carry social or administrative functions which a currency should not have, smart contracts should be used with caution or not at all. As an example, he referred to how original cash did not carry a social or administrative construct by itself, but they were defined by the situations that it was applied towards.
He also mentioned that unlike fiat in its cash form, smart contracts could infringe upon the privacy of citizens, which will affect the adoption of this digital currency and thus should be avoided.
Citing these reasons, he emphasized that utilization of smart contracts would affect the legal functions of the digital currency itself or just cause it to disappear behind documentation altogether. He also mentioned that it would not be in line with the protection of rights and interests for the country’s citizens.
How Soon Can the Digital Currency Be Launched?
It seems that the bank, while considering this seriously, could take a few more months at the very least before it announces something of this sort even if the venture is to remain on paper for a while before it could be launched.
Seeing China’s treatment of cryptocurrencies, it will be fascinating to see how the government reacts to the digital currency that comes from its central bank itself.
However, judging from the institutions’ relationship in the past, it is likely that the bank will not take any steps before having all possible scenarios cleared by the government to keep running its operations smoothly.