Is the PBOC using technology appropriately?

Is the PBOC using technology appropriately? Source: Shutterstock

Is China really developing a sovereign virtual currency?

CHINA is considered to be an advanced nation when it comes to all things digital.

And although the country disappointed many when it banned the trading of bitcoins and other popular cryptocurrencies — China hasn’t given up on blockchains or cryptocurrencies.

Local news suggests that the country’s central bank, the People’s Bank of China (PBOC), is hiring cryptography experts to help develop its own sovereign virtual currency.

Hiring plans and job descriptions suggest that the PBOC is looking for a total of four employees who specialize in computer science, cryptography, or microelectronics, and are interested in research and development of software, encryption models, and chips used for digital fiat currency and its trading. Preference will be given to those with prior experience in blockchain or big data.

Experts believe that the PBOC is going down this route as a digital currency will be cheaper to handle and easier to trace.

While the PBOC is yet to reveal a timetable for the launch of its fiat digital money, it is expected that the introduction will be planned in a manner that ensures the smooth running of monetary and financial stability policies and protects the consumers at the same time.

Earlier this year, Chinese Academy of Social Sciences (CASS) researchers said using central banks should consider using digital currencies in cross-border payments as it could cut transaction time and costs.

“The average transmission time could be shortened to less than 1 day from 3-5 days traditionally and the cost could be reduced to 1 percent or less from about 7.2 percent,” said Liu Dongmin and Song Shuang at the CASS.

And while a sovereign virtual currency is something that the PBOC can manage and control, currencies built on the underlying technology such as bitcoins and others couldn’t be controlled efficiently.

The government has always been of the opinion that it is happy to accept cryptocurrencies that “bring efficiency, low cost, and safety” to consumers as long as they “don’t directly conflict with the current financial stability and financial order.

However, bitcoin and other similar products have been launched too quickly but not cautiously, and China feels that their rapid proliferation may have a big negative impact on consumers.

In essence, through the creation and use of a virtual sovereign currency, the country and its people can enjoy all the benefits that blockchain brings to currencies while protecting the economy from all of its instability and shocks.