On March 19, 2018, The National People’s Congress of China confirmed that economist Yi Gang would be the next governor of People’s Bank of China (PBoC). Mr. Yi Gang, who obtained his Ph.D. in Economics from the University of Illinois, is due to replace the current governor Zhou Xiaochuan as the head of China’s central bank.
According to local media reports, Yi Gang had said that people were free to buy or sell cryptocurrencies on the internet in 2013. Talking about bitcoin at the same forum, he had also warned that it was nearly impossible for the PBoC to legalise bitcoin or any other cryptocurrency. Nevertheless, he was optimistic about the long-term perspective of bitcoin and went on to call cryptocurrencies “inspiring.”
Will China Shift to a More Receptive Stance on Bitcoin?
The past remarks made by the soon-to-be governor of the People’s Bank of China has excited cryptocurrency enthusiasts in China. Some believe that he may be willing to legalize digital currency trading in the country again or, at least, have a more accommodating policy since the PBOC has always had a tough stance on the matter in the past few years.
Yi, who has been serving as a deputy governor since 2008, is widely expected to continue the economic liberalization policy that had been initiated by his predecessor Zhou.
Speaking at a press conference on March 9, 2018, Mr. Zhou signaled that China would be slowly be regulating digital currencies, even though the Central Bank refuses to legalize bitcoin. He said, “Lots of cryptocurrencies have seen explosive growth which can bring significant negative impact on consumers and retail investors.” He also added that the central bank is not comfortable with cryptocurrencies as they provide a huge opportunity for speculation and give people the illusion of getting rich overnight. However, he later mooted the idea of a central bank-backed cryptocurrency.
Throughout most of 2017, China accounted for a significant share of the global cryptocurrency trading volume, which came to an abrupt end in September 2017 when the government announced a blanket ban on cryptocurrency trading. Since then, the government has even gone on to suspend social media accounts belonging cryptocurrency exchanges. Consequently, Japan’s growth as a crypto hub swelled.
Central Banks Take Note of Bitcoin
China is not the only country to have imposed regulatory bans on cryptocurrency trading. Japan penalized six cryptocurrency exchanges in March 2018 for failure to comply with its cybersecurity rules. South Korea and the European Union have also adopted a tough stance on the issue. However, unlike China, most of these countries have only tightened regulation, while still allowing the ecosystem to thrive.
Notably, Mark Carney, the Governor of the Bank of England, stated that crypto assets do not pose a risk to the world’s economy. Addressing the G20 Finance and Central Bank Governors through his letter, he said that cryptocurrencies do not pose a major risk to the mainstream finance industry as the industry is still in a nascent stage and comparatively small. His words came as a major relief to cryptocurrency investors following heightened speculation that world finance leaders may adopt a more tough stance on cryptocurrencies and their trading.