China Bank Chief Cites Impact of Blockchain
People’s Bank of China (PBoC) governor Zhou Xiaochuan talked about the impact of digital currency and blockchain during a rare press conference held last week during the annual National People’s Congress sessions in Beijing. But he also was cautious about how far that impact would extend, indicating that China’s existing bitcoin platforms will not become exchanges, terming that unlikely to happen.
Zhou discussed the yuan, capital control, FinTech and market regulations in his wide-ranging talk. Zhou said the central bank encouraged the development of FinTech and was willing to cooperate with industry participants to boost its development.
“New technologies, such as digital currency and blockchain technology, will generate far-reaching impacts that may not be foreseen or predicted currently,” the central bank chief said. He added that regulation is needed on bitcoin, and that measures would be forthcoming from regulators to add oversight.
Bitcoin activity in China has slowed considerably since the beginning of the year. Volume is down about 80% since regulators began investigating the domestic bitcoin platforms, and while Zhou refused to close the door on digital currency, there are clearly some major hurdles before any normalization of digital currency becomes reality, mirroring the regulatory stance of US securities and exchange governors.
The PBoC, under Zhou’s leadership, has stated that it is open towards new technologies. Last year, it stepped up its research on a kind of “sovereign digital currency” and will unveil a research body soon, the first of its kind in major economies.
The PBoC governor also struck a reassuring note during the press conference, saying that the yuan had no basis for sustained depreciation. He cited “healthy economic growth” and a “stable financial market” as reasons for this.
“As the Chinese economy stabilizes and becomes healthier, and the nation makes achievements in supply-side reforms and global investors become more confident in China’s economy, the yuan’s exchange rate will naturally be on a trend to stabilize,” said Zhou.
