China’s central bank deputy governor said the bank is “quite worried” about risks from private digital currencies, particularly so-called stablecoins, such as Tether, while China is testing its own digital yuan.
According to CNBC translation, Fan Yifei of the People’s Bank of China (PBOC) has voiced concern that digital currencies pegged to a fiat currency could pose a risk to the stability of the global financial system.
“Some commercial organizations’ so-called stablecoins, especially global stablecoins, may bring risks and challenges to the international monetary system, and payments and settlement system, etc.,” he said. “We are still quite worried about this issue, so we have taken some measures.”
Stablecoins are digital currencies tied to a fixed value, such as a government-backed currency like the U.S. dollar. One of the most popular stablecoins is Tether ranks third in market capitalization behind Bitcoin and Ethereum.
The Chinese banker also said the PBOC is already taking measures against the crypto sector.
China’s central bank Tuesday closed a Beijing-based company that provides software services for virtual currency transactions, so reaffirming the central bank’s attitude that no businesses under its jurisdiction should engage in such transactions.
Fan Yifei also said the risk of other digital assets, like Bitcoin, is also problematic.
“These currencies have themselves become speculation tools,” he said, adding that they posed a risk to “financial security and social stability.”
As the banker said, the speed of development in payment systems is “very alarming” and the PBOC is working against monopolies and “disorderly expansion of capital.”
Fan Yifei noted that his work at the central bank included digital currencies (CBDC). The PBOC is developing a digital version of the Chinese yuan, which already had its pilot test in several regions of the country last year. Unlike Bitcoin’s decentralized network, China’s digital yuan and other CBDCs are controlled by central banks. As Fan said, the invite-only digital yuan system has more than 10 million users.