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Chinese central bank governor warns on Bitcoin

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(Source: People.com.cn)  Today the Governor of the People’s Bank of China, Mr. Zhou Xiaochuan, responded to questions from Chinese and foreign reporters about the issues related to “financial reform and development” at the press center of the First Session of the 13th National People’s Congress, stating that the rapid expansion of Bitcoin and other bifurcation products will affect consumers. The adverse effects will have an unpredictable effect on financial stability. The central bank did not recognize virtual currency such as Bitcoin as a retail payment tool and currently does not accept or approve related services. Governor Zhou Xiaochuan pointed out that the supervision of virtual currencies in the future is dynamic, and that the supervision depends on the level of technological development and also depends on the results of local tests and assessments. It remains to be seen.

When answering the questions, Governor Zhou Xiaochuan believed that digital currency is essentially the pursuit of rapidity and low cost of the retail payment system. However, he made it clear that he must pay attention to financial stability and risk prevention while protecting consumers. While considering new technologies, it is necessary to clarify the service direction of new technologies. “We don’t like to create a speculative product that creates an overnight illusion, but we must consider how to serve our economy.”  Governor Zhou Xiaochuan bluntly stated that digital currency not only brings efficiency and low cost to consumers and the market, security, privacy protection, but also consider the overall situation, can not conflict with the current financial order.

When talking about Bitcoin, Governor Zhou Xiaochuan believes that the rapid expansion of Bitcoin and other products will have unpredictable effects on financial stability. At present, the use of digital currency in virtual assets transactions is not in line with the direction of financial assets serving the real economy in China.

“Steady and orderly R&D, emphasizing service to the real economy, reducing costs, and preventing it from becoming an excessively speculative product.”  Governor Zhou Xiaochuan emphasized that if new technology becomes an immediate new financial product or new transaction block, then the application must be applied for and evaluated.  We must evaluate “the things that are not prudent are stopped first and if they are reliable and then we can proceed.”

In addition, Governor Zhou Xiaochuan emphasized the need to pay attention to consumer protection and investor protection, and strengthen investor education and consumer education. Investors and consumers must learn to use the new productand understand risk.

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