Former Bank of China vice president says digital currencies can be a substitute for cash on circulation.
The former vice president of China’s central bank pushed for central bank digital currencies positioning it as a substitute for cash in circulation.
Wang Yongli, former vice president of Bank of China and a director of the Haixia Blockchain Research Institute, said digital currencies can certainly be a substitute for cash but it shouldn’t be confined to just that, according to the Global Times.
Wang said digital currencies can reshape monetary structures. These can include setting up “basic accounts” for all social entities on a central bank’s digital currency platform. This allows the bank to supervise digital currencies without much impact on the current financial system.
He added a digital currency improves monetary policy effectiveness because the excessive issuance of physical, paper money will be prevented.
His comments come as more central banks consider launching digital currencies. The Bank of China has been at the forefront of these with plans to come out with the digital Yuan. China has not released details on the digital Yuan yet but some industry insiders believe it may not become the prevailing currency due to the “China Dream.” Other central banks started exploratory commissions into digital currencies. The Bank of Japan recently appointed its head of research into its foray into digital currencies and the Philippines announced plans to look into its digital currency.