Chinese Official: Bitcoin Can 'Co-exist' with Fiat Currencies
Published on December 15, 2014 at 14:33 GMT
A former vice-governor of China's central bank, Wu Xiaoling, has said that digital currencies like bitcoin "could co-exist with fiat currencies".
Wu, who is currently a member of National People's Congress Standing Committee and a vice-chairperson of the Financial and Economic Affairs Committee, made her remarks as keynote speaker at the Sanya International Financial Forum, amainstream event featuring political and business leaders.
It was the first time digital currency played a formal role at a high-profile Chinese event, with its own dedicated track named "Digital Currency: From Information Network to Value Network".
The comments make Wu one of the highest-ranking Chinese officials to speak publicly about bitcoin, and likely the first to discuss cryptocurrencies at length in a formal setting.
In April, central bank governor Zhou Xiaochuan stated that the bank did not intend to 'ban' bitcoin. In other unconfirmed comments, Xu Nuojin, deputy head of the PBOC's Statistics and Analysis Department, described bitcoin as a "kind of folk currency".
Optimism and caution
According to translations posted on Bitcoin Talk and news site Bitell, Wu claimed that currency competition was a normal and inevitable phenomenon in human society. Whether digital currencies have the ability to become widely-used mainly depends on their acceptance, the recognition of industry participants and stable pricing, she said.
While cryptocurrencies solve the trust issue, she added, they miss a supply-demand mechanism that is required to meet economic demand and avoid price volatility.
Though Wu said digital currencies were unlikely to make effective daily currencies, she said they could function as financial products or assets and provide key technological benefits to users.
Like other government officials worldwide, Wu also referred to issues regarding international money transfers, including money laundering and traceability.
She said she foresees a future where multiple settlement protocols will co-exist, adding that using technology to build a decentralized value transfer network is an idea that deserves further consideration.
Chinese industry represented
Also invited to speak on digital currencies at the event was Leon Li, CEO of major Chinese trading platform Huobi.
Sharing facts and statistics from his time in the industry, Li took the opportunity to talk about bitcoin from an insider's perspective.
He commented that bitcoin (and other digital currencies) offered the traditional finance industry a chance to lower its costs and improve efficiency.
China's bitcoin year
The news comes at the end of a year that has seen Chinese authorities show everything from veiled hostility to seeming indifference towards bitcoin, as its value continued to slide.
Earlier this year, Chinese banks closed accounts attached to bitcoin businesses, and in May exchanges withdrew at the last minute from the country's first bitcoin conference in Beijing. Local media were also conspicuously absent from the event.
Since then, however, exchanges have been allowed to operate as normal and expand into new areas without interference, while a second conference in Shanghai in September raised controversy only over its remote location.
In a further display of China's warming climate, the nation's largest portal site Baidu has added a bitcoin index to its list of services, with regular price updates.
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