A customer makes a payment using China’s digital currency (e-CNY) at the Wangfujing department store in Beijing, China, on February 11, 2021.
VCG | Visual China Group | Getty Images
BEIJING – China’s central bank is “quite concerned” about risks to the global financial system from privately developed digital currencies, especially global stablecoins.
These digital currencies are tied to a fixed value, such as a government-supported currency such as the US dollar. A popular example is Tether, which has raised concerns with the US government and ranks third behind the popular cryptocurrencies Bitcoin and Ethereum in terms of market capitalization.
“The so-called stablecoins of some commercial organizations, especially global stablecoins, can pose risks and challenges to the international monetary system, payment and settlement system, etc.,” Fan Yifei, an assistant governor of the People’s Bank of China, told reporters Thursday in Mandarin , according to a CNBC translation.
“We’re still pretty concerned about this issue so we’ve taken some action,” said Fan.
He found that his work at the central bank included digital currencies. The PBoC is developing a digital version of the Chinese yuan that has been tested in several parts of the country over the past year.
So far, the invitation-only yuan digital system has more than 10 million users, Fan said.
In contrast to Bitcoin’s decentralized system, the PBoC’s digital yuan is controlled by the central bank.
The control of payments does not end with Ant
However, the immediate challenge to the PBoC’s control of currency transactions has been the rise in bank account-linked mobile payments in China. In recent years, apps from Alibaba subsidiary Ant Group and WeChat from Tencent have become the dominant means of payment in the country, replacing cash.
Regulators abruptly suspended Ant’s massive IPO last fall, and the central bank forced the company, which posed as a financial technology player, to reorganize as a financial holding company.
The PBoC will apply the measures it has taken against Ant to other companies in the payment services market, Fan said Thursday in response to a separate question, speaking broadly of efforts to counter monopoly practices.
The development of payment systems is “very alarming” and the central bank is working against monopolies and “disorderly capital expansion,” said Fan.