Could the People's Bank of China Persuade the Chinese Government to Introduce a Yuan-Pegged Stablecoin?
By Tyler S – Cryptocurrency Investor
Researchers at The People’s Bank of China (PBoC) have reportedly suggested that the Chinese government should explore the possibility of launching a Yuan-pegged Stablecoin as found on China Finance. It is looking at the rise and defects of digital stable tokens.
Digital currencies have gained attraction from all over the world with its distinguished features such as anonymity, decentralisation and fixed transactions. It has also had a reputation for money laundering and value instability. As to minimise this risk the idea of a stable currency has been created to enter the digital currency space. The stabilisation of digital assets still lacks regulation.
Stablecoins have the advantage of using blockchain technology and reducing the price volatility. By bypassing the commercial bank and making cross-border payments more cost effective without any time or space restrictions, stable currencies still do not address some of the key issues with digital currencies. These risks are contrasted by their insistence on helping others buy cryptocurrency in a safer, less volatile market.
The impact of moving to digital currencies effects the traditional financial system in many ways. It could make many of the bank's services decline as people exchange traditional currencies for digital and as the digital currency is decentralised, it offers a service they do not currently provide. Examining the success of the US dollar stable currencies, the US government will look to approve more Stablecoins in the future. The current size of the market is small and would need to become widely used until it has a big impact on crypto buying and the traditional finance system. Buying and selling Bitcoin amounts to 52% of the cryptocurrency market share so Stablecoins still have a long way to go.
As China has banned cryptocurrency transactions, it is currently researching into the blockchain technology arena. The strict rules China has may change if the US stable currencies become commonly used in the market place. BC Bitcoin will be watching the status of the US Stablecoins closely as when this does become widely adopted, other countries may follow suit potentially inducing more to buy Bitcoin.