- Bitcoin, Stablecoins and other cryptocurrencies threaten the financial security and social stability of the nation
- Cryptocurrencies are speculative tools
- Central Bank Digital Currencies are divided into Wholesale and Retail
- Wholesale central bank digital currency is issued to institutions such as commercial banks for large value settlement
- Retail central bank digital currency are issued to the general population.
The Deputy Governor of China’s Central Bank, Fan Yifei has spoken on the position of cryptocurrencies such as bitcoin and stablecoins. He said, they are speculative tools and that they threaten the financial security and social stability of the country.
Fan Yifei spoke at the State Council Policy briefing which held at 10AM local time on the 8th of July, 2021.
According to him, digital currencies are divided into private digital currencies and central bank digital currencies (CBDC).The private digital currencies are such as bitcoin, stablecoins and their likes which are launched by private individuals or entities. These private digital currencies have become a speculative tool in their own right. The Central Bank Deputy Governor believes that these private digital currencies may bring risks and challenges to the international monetary system, payment and settlement systems.
He noted that they are worried about the issue but have adopted certain measures.
While we study the private digital currencies, Fan Yifei said, we must “vigorously promote central bank digital currency.” The People’s Bank of China Deputy Governor explained there are two types of Central Bank digital currency. One is wholesale central bank currency, which is mainly used for large value settlements by institutional entities such as commercial banks; while the other is the retail central bank currency which is issued to the general populace and can be used for everyday transactions.”
“At present all sectors of the society have basically formed some consensus on the influence of wholesale central bank digital currency. Most studies believe that the wholesale central bank digital currency will not have an impact on the existing financial system.”
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On whether the issuance of retail CBDC will cause financial disintermediation and weaken monetary policy and intensify bank runs, he noted that they are controversial; yet, they are also deeply concerned on the impact of the retail central bank currency on the health of the financial and monetary system. “We are currently in the process of piloting; what impact these digital renminbi will have on the monetary system, monetary policy and financial stability has always been highly concerned.”
He continued;
“We are also working hard to ensure that the digital renminbi system has an impact on these macro aspects through business, technology and policy design. The impact is minimized.”
We are still confident that this will work, he added.
