China’s much-anticipated digital-only currency concept is tentatively called “DCEP” for “digital currency electronic payment”, said the People’s Bank of China governor Zhou Xiaochuan in a media briefing this morning (local time). However he gave little other new information as to what form the DCEP would take — i.e. whether it would be a blockchain-based cryptocurrency, or simply a digital transferable token with no physical representation.
Bloomberg reported Zhou’s speech was likely a swansong, as observers have expected him announce his retirement and possibly a preferred replacement for some time. China’s National People’s Congress will elect a new governor on March 19th.
After speaking generally on where China’s economy should go from here, Zhou faced several questions about the country’s regulation of ICOs, bitcoin, and the central bank’s own digital currency plans, according to local cryptocurrency news service 8BTC.
Zhou revealed the proposed digital currency will be called DCEP, but not much else. It could be based on new blockchain technology, distributed ledger technology, or something that already exists, said 8BTC. Essentially the study of digital currencies isn’t to find new technical solutions for money, but how to make it easy for payments — convenience, rapidity, low-cost, secure, and with “privacy protections”.
However the PBOC has been researching the idea of a national blockchain-based cryptocurrency since 2014, and a year ago announced it was running trials on such a platform.
Bloomberg noted research into the digital-only currency is continuing steadily, and PBOC would start a pilot program once progress was made.
“DCEP” is likely a working title anyway, just as Europe once had its “ECU” (European Currency Unit) that later evolved into the euro.
No Surprises, but DCEP Shows China’s Always Got Digital Currency on Its Mind
Reactions from commenters in the invite-only crypto WeChat group “ChinaPowWow” were mixed, with some praising China’s speed at moving ahead with its plans, and others saying there was nothing surprising about today’s news.
Zhou didn’t indicate any change of direction for China’s policy on other digital assets, including cryptocurrencies and ICOs. He did say supervision of the industry was “dynamic” with no certain regulatory policy, but also mentioned the oft-repeated central bank concerns about stability, consumer protection and investor risk from excessive speculation.
70 year old Zhou, who has held the PBOC governor’s position for a record 15 years, is generally regarded as a reformer who wishes to see China’s economy open further. In the time he’s been in the job China has moved from the world’s #6 economy to second position, though reports say its leaders are now looking for more stable and steady growth, and have similar desires for the national currency, the renminbi (RMB or CNY).
Though the prospect of national cryptocurrencies often excites industry media in this space, there’s little for its long-time fans to cheer for, other than the chance to examine the technology used. The inherent promises of Bitcoin and its imitators include its decentralized, non-governmental nature.
No national digital currency, crypto- or otherwise, can satisfy these needs — it would remain centrally-controlled, its users trackable and subject to usage restrictions, with a value based on the same market conditions that determine countries’ existing fiat currencies.
A blockchain-based cryptocurrency could potentially have a supply cap like bitcoin, pleasing the “sound money” crowd — but then it might not. No government is likely to permit its national currency to be open-source or its code determined by third-party miners.
In any case, most of the world’s major fiat currencies are over 90 percent digital in supply today anyway. China’s existing national currency isn’t tradable internationally and doesn’t have a free-floating value. Whatever technology countries use for currencies and commerce, little on the policy side is likely to change dramatically in the coming years, absent an economic crisis or other “black swan” event that forces it.