Former BOC President: Digital Currency Will No Doubt Maintain Its Dominance in Future Digital Economic Competition

On May 5, Li Lihui, former president of the Bank of China and the head of the blockchain research group of China Internet & Finance Association, gave a live program entitled “Digital Currency: Possible Reconstruction of the Global Monetary System” on People’s Daily Online.

Li Lihui first classified digital currency as legal digital currency, cryptocurrency, and digital currency of trusted institutions. He detailed the history and current situation of these three types of digital currency, among which the evaluation of cryptocurrency is impressive.

“Influenced by the economic factors, cryptocurrency will survive and keep growing, very few will be popularized, while most of them can only fade away. In the future, if the underlying technology innovation of the blockchain on which the cryptocurrency depends can break through the bottleneck of large-scale application as well as the operation mechanism update can refrain from the problem of value stability, it is possible for cryptocurrency to enter the popular trading and payment scenarios.”

Li believes that if we view the essence of money as “a contract about exchange right”, we should emphasize the economic support and financial attribute of exchange right.

“Coin or token not only becomes value mark and payment tool in the crypto community, but also can be traded with fiat money to form transaction price, which also has the attribute of financial tool. Therefore, it may be more appropriate to define coin or token as “cryptocurrency”. At the same time, it should be clear that cryptocurrency is different from legal digital currency and trustable institution digital currency if it does not have qualified to issue subject, physical asset support, and sufficient credit endorsement.”

In the past two years, the price of the cryptocurrency has undergone ups and downs. Very few are allowed to become securities, most are suspected of illegal fund-raising. He said that he didn’t agree with the investment in some cryptocurrencies like bitcoin, because it’s too risky, more like a speculative tool without prospect, according to 8btc’s previous report.

Li also shared some ideas about China’s CBDC DCEP

Q 1: Will China’s DCEP is pegged to gold?

“Li: It won’t. The legal digital currency of our country is actually our traditional currency, that is, the digitization of RMB, which is the digital form of currency, and it is not directly being pegged to gold.”

Q 2: Can we buy bitcoin?

“Li: I would like to remind you cautiously that the risk of speculation in bitcoin is greater. You must be very cautious when entering the crypto market.”

Q 3: Can the DCEP be used for international transactions?

“Li Lihui: Cross border, point-to-point, end-to-end, large-scale transactions, which is the ability of digital currency. Of course, the central bank has not made specific arrangements for whether China’s DCEP can be used for international and cross-border transactions.”

Q 4: Will the securities be tokenized in the future?

“Li: The future securities may be digital assets. In the future digital assets market, there will be some securities and other financial tools that adopt the digital way, so we should further study the construction and development of the digital market.”

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