During a recent interview, the former president of the People’s Bank of China offered his thoughts on CBDCs and their role in the modern economy, as well as his thoughts on the underlying reason behind the country’s cryptocurrency crackdown.
He believes that, while other nations employ a variety of approaches to integrating digital currencies into their economic systems, China will identify and adopt the most effective approach.
According to Zhou Xiaochuan, the most fundamental role of money is to serve as a means of payment; otherwise, it is intrinsically ineffective in the old economic system. While the currency may serve as a means of storing information, it must also be helpful for making payments.
There will be various benefits to the economy as a result of the implementation of CBDCs, including lower costs, more convenience, and greater stability. They are more convenient and flexible than traditional payment methods, and they are becoming increasingly popular. The digitization of the economy will also have a positive impact on businesses. A more effective and simpler accounting system will be able to be established by small businesses.
Taking a shot at the Chinese government’s most recent actions towards traditional cryptocurrency and mining, Zhou asserted that “survival of the fittest” was the only way forward because the decentralized blockchain-based digital currency is not the most convenient payment method for traditional economies.
According to all indications, the former president of the Central Bank of China was referring to the scaling issues that current cryptocurrencies face, which include issues like fees, network congestion, and the speed at which transactions are processed.