• Bitcoin and stable coins, according to a Chinese central bank official, are a threat to financial security

  • Bitcoin and stablecoins, according to Fan Yifei, Deputy Governor of the People’s Bank of China, are speculative and pose a threat to financial security and social stability, according to a State Council policy briefing held this morning. He also described the piloting of the digital renminbi. An AFP reporter asked Fan Yifei about the central bank’s response to virtual currency speculation at the State Council policy briefing. Bitcoin and “so-called” stablecoins, according to Yifei, are the “typical representatives” of these forms of digital currencies. “These currencies have evolved into their own speculative weapon. When this occurs in the market, there are also possible threats that jeopardize financial and societal stability. “Stablecoins, in particular, might potentially bring “risks and challenges” to the international monetary system,” he added. He acknowledged that the bank was concerned about the situation and that it had already taken steps to address it. He stated that the central bank was continuing to study and analyze private digital currencies while also pushing and developing its own central bank digital currency (CBDC) “vigorously”. CBDCs are divided into two sorts, according to him: one is a “wholesale” central bank currency used for high value settlements by commercial banks and other institutional entities, and the other is a “retail” central bank currency used for small value settlements by commercial banks and other institutional entities. The other type was for retail, which was used for everyday transactions by the general public. Yufei acknowledged that the bank was concerned that retail CBDCs would have a negative impact on the financial system, whether through “financial disintermediation”, undermining monetary policy, or worsening bank runs. He added that his bank was “piloting” the digital renminbi, and that the program’s scope will continue to expand. He claimed that the program’s “whitelist invitation method” had ten million users. The next pilot, he suggested, would take place during the Beijing Winter Olympics. This content is provided solely for informational reasons. It is not presented as legal, tax, investment, financial, or other advice, and it is not intended to be used as such.

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