The development of a central bank-backed digital currency is “inevitable,” says the People’s Bank of China’s chairman, Zhou Xiaochuan.
However, it’s not certain whether this digital currency will take the form of a cryptocurrency or whether some other technological innovation will form the basis of this currency, he said in remarks during a press conference on Friday, in which he also took aim at speculation around cryptocurrency markets.
Any potential development of a digital currency will follow the needs China believes must be fulfilled, he said. The first need, he explained is that any digital currency must focus on “convenience, rapidity and low cost in a retail payment system while taking into account security and protection of privacy.”
Despite some speculation to the contrary, Zhou didn’t formally unveil any kind of digital currency product – rather, he outlined what it may look like, suggesting that distributed ledger tech could underpin a future release.
Yet as it stands, existing cryptocurrencies do not meet the aforementioned needs, he said, going on to explain:
“We think that we need to be more cautious in this direction, because this doesn’t serve our goals that financial products shall serve the real economy.”
To that end, the bank must carefully research any bank-backed digital currency to prevent it from becoming a speculative product, he said.
“The emphasis should be to serve the real economy,” he remarked, adding that any new digital currency should also “not conflict with the current financial order.”
Editor’s Note: Comments in this article have been translated from Chinese.
Zhou Xiaochuan image via the U.S. Department of the Treasury / Wikimedia Commons