Chinese Communist Party Exec Wants State Monopoly on Digital Currency

Published at: Feb. 27, 2020

Chen Weigang, former Vice President of China Insurance Regulatory Commission of the Communist Party, sat down with Yiben blockchain media on Feb 27 to talk about ICO regulations and digital currency trading in China. He told the media that a central bank digital currency (CBDC) is an important strategic plan for the Chinese RMB to gain an upper hand in international economic development.

During the interview, Chen was asked to comment on the ongoing ICO Ponzi schemes in China. Chen believed that ICOs and cryptocurrency trading needed to be banned completely in the future. He added that:

“I always believe that speculation in cryptocurrency and ICO is not the direction of financial development and must be resolutely banned.”

One of the main difficulties in regulating such pyramid schemes is there is no clear supervision division in the current regulatory framework. Chen thinks that in order to crack down on the ICO scams and cryptocurrency speculations, all regulators including China's banking and insurance regulatory commission, China securities regulatory commission, public security organization and Internet and cultural authorities should work together.

Although Chen thought cryptocurrency speculation was illegal, he pointed out that digital assets trading was a different story. He said that digital assets were tradable with fiat currencies. He commented that:

“As for digital currency transactions, I believe that the supervision of various departments in the country will become more and more strict, leaving no market for transactions. For example, Banks and formal payment institutions will be prohibited from providing channels for digital currency transactions. Private deals may continue, but they will not be mainstream.”

CBDC wasn’t born yesterday

China has been preparing for DCEP (Digital Currency Electronic Payment) ever since 2015 according to Chen. He explained that DCEP’s direct peg to the Renminbi was an important national strategy to China. He added that.

“We must be ahead of the rest of the world, at least technologically. Only in this way canthe RMB take the initiative in the future international economic development.”

In December 2019, Chinese media reported that the central bank was planning to conduct the first real-world test of its CBDC. The project has been in development slowly, but it reportedly accelerated last year when Facebook’s Libra was officially announced.

Tags
Regulation
China
Cbdc
Related Posts
China’s central bank says crypto gave impetus to the creation of its CBDC
Much attention has been paid to the global, geopolitical implications of China’s rapid and pioneering development of its digital yuan, also provisionally known as e-CNY. Yet in a new white paper published by the Working Group on E-CNY Research and Development of the People’s Bank of China (PBoC), the institution gave a more domestic-focused and technologically-driven vision of the new currency’s background and key objectives. Recapping the currency’s research and development timeline, the paper notes that the PBoC first set up a task force to study digital fiat currency back in 2014. By 2016, it had established a Digital Currency …
Technology / July 16, 2021
‘No single digital currency will dominate the world’ Bank of Japan now says
There appears to be a disagreement within the top echelons of Japan’s government on the threat that China’s CBDC poses to the nation. Just last week, Kenji Okamura, vice-finance minister for Japan’s international affairs voiced concerns over its neighbor’s efforts in the space, stating “first-mover advantage is something we should be afraid of." Today’s statement from Kazushige Kamiyama, who leads the Bank of Japan’s (BOJ) CBDC efforts, appears to contradict this previous sentiment. He said that on the contrary, the first-mover advantage may easily turn into a disadvantage, and that no single digital currency will dominate: “I don’t think a …
Regulation / Oct. 15, 2020
Regional CBDCs Can Fuel International Trade, but USD Seems Unbeatable
As central bank digital currencies continue to be researched and tested by countries across the globe, it becomes more apparent that the United States dollar’s reign might be challenged once the concept is implemented on a regional scale. While most retail CBDCs focus on internal economic matters, some projects aim to facilitate trade relations within a specific region, forming a digital alternative to the greenback. The most eloquent example would be the East Asia cryptocurrency that was proposed earlier in June — a virtual asset backed by a basket of currencies including the Chinese yuan, Japanese yen, South Korean won …
Adoption / June 25, 2020
China's central bank plans digital yuan pilot for payments to Hong Kong
China’s central bank and the Hong Kong Monetary Authority, or HKMA, are in the preliminary stages of piloting the digital yuan for cross-border payments — underscoring another key development in the rollout of a central bank digital currency, or CBDC. In a media release that appeared on the HKMA website on Friday, chief executive Eddie Yue provided an update on the ongoing work surrounding cross-border payments. He indicated that HKMA is in dialogue with the People’s Bank of China, or PBoC, to begin pilot testing the e-CNY. Yue said: “The HKMA and the Digital Currency Institute of People’s Bank of …
Regulation / Dec. 4, 2020
China to Test Digital Yuan on Food Delivery Platform With 435 Million Users
The People’s Bank of China (PBoC) is planning to add the Tencent-backed food delivery giant Meituan Dianping to its list of platforms that will test real-world use cases of the digital yuan. Meituan Dianping is a Beijing-based food delivery platform that currently boasts of more than 435 million active users and billions of dollars of daily transactions. This creates a huge opportunity for the mass adoption of the digital yuan, which is also referred to as the Digital Currency Electronic Payment or DCEP. Unnamed sources told Bloomberg that Meituan had been in talks with the research arm of China’s central …
Technology / July 15, 2020