Daily Management Review

China steps up introduction of state crypto currency


11/07/2017


Director of the Institute for Digital Currency Research at the People's Bank of China said that the central bank should issue its own crypto currency in the shortest time and that this project is of paramount importance, South China Morning Post writes.



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publicdomainpictures
Director of the Institute for Digital Currency Research at the People's Bank of China spoke at a forum in Beijing this Saturday. There, he told about importance of issuing a digital payment facility. In his opinion, its own crypto currency will reduce costs and provide access to financial services to rural residents, as well as improve efficiency of the monetary policy of the central bank.

According to him, "development of the digital economy needs a e-currency of the central bank more than ever before." He also called the central bank’s future currency "the diamond in the crown" of the fintech industry.

The People's Bank of China has repeatedly expressed its desire to issue its own adjustable crypto currency. China has been preparing its own digital yuan since 2016. In June 2017, the local regulator successfully completed various tests in this area, including, among other things, identification of fictitious transactions between banks.

Earlier, the media reported that the People's Bank of China had already developed a prototype, which will regulate the supply of digital money in the future. According to information from China Daily, which refers to a high-ranking source in the Central Bank, the regulator developed and tested algorithms needed to work with digital currencies. Note that this is not about crypto-currencies, but about digital currencies in digital form.

The Middle Kingdom is infamous with its huge shadow banking sector, where banks put fictitious bills to each other. In addition, many financial institutions receive funding secured by metal with the help of import deals and so on. These schemes have long been known, and the central bank is trying to deal with them. Launch of a digital currency will largely solve this problem.

Despite the prohibitions, bitcoin in the Middle Kingdom is the most popular asset among criminals who launder money through the trade. This is evidenced by the data of the new report of the Drug Enforcement Administration of the USA (DEA).

According to DEA, manufacturers of goods are actively using bitcoin schemes in China. The Office explained that this crypto currency is very popular in the PRC, as it can be used for anonymous withdrawal of funds abroad and bypassing regulators monitoring cash flows.

CoinDesk notes that the DEA report does not include any details of such transactions or amounts, which were thus legalized.

The authors of the report also assert that over-the-counter (OTC) trade helps to simplify international transactions, which are used for money laundering through trade, and this trend, in their opinion, will continue.

"It is expected that the increasing use of OTC, which contributes to the ability to transfer millions of dollars in the crypto currency through international borders, as part of the capital withdrawal scheme will continue to be used by criminal organizations," the report said.

Banning the currency exchange, China's authorities contributed to the growth of trading volume to 680 million yuan (about $ 103 million) on the three leading international OTC-platforms.

Earlier, the National Committee of Experts on the Internet Financial Security Technology published an official report on the state of the OTC-trade in bitcoin in China.

According to the paper, in China OTC-trade usually does not have a fixed place, prescribed membership, strict rules and regulation. One-on-one transactions are the most popular, which are held by the parties through private negotiations.

In addition to P2P trading, Chinese citizens also make transactions in person or through messaging services, such as QQ, Wechat, Telegram and Slack, the report said. The main methods of OTC-trading bitcoin are Alipay, Wechat and bank transfers.

The report also notes that after tightening regulations for crypto-exchange exchanges, local OTC-platforms are gradually leaving the market. Accordingly, international OTC-sites, such as Localbitcoins, Paxful, Coincola and Bitcoinworld began to grow trading volumes in CNY.

source: scmp.com






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