China’s Central Bank Governor Is Critical Of Crypto Speculation
Zhou Xiaochuan, Governor of the People’s Bank of China, stated on March 9th that his country is not so eager to quickly launch its own cryptocurrency. During a press conference that spanned Two Sessions, which are part of China’s yearly political briefings, Xiaochuan said that the development of a digital currency requires careful thought and attention to detail. Furthermore, he stressed that the country should stay away from “excessive speculation.”
Speaking in more general terms, the prominent economist remarked,
“We don’t like the idea of creating a speculative product that prompts people to fantasise about striking it rich overnight. This is not a good thing.
Notably, these comments have come after China’s government embarked on a nation-wide cryptocurrency crackdown. The heightened government scrutiny focused primarily on clamping down on the trading that occurs on centralized digital currency exchanges, and more recently, on overseas cryptocurrency activity. Although crypto-related business that happens outside of the nation’s borders is not in its jurisdiction, the Chinese government asserts that it has a right to monitor international crypto-markets. That’s because it claims that these crypto-related services are still accessible to its citizens.
China Poised To Become The World’s Largest Economy
Keeping China’s $11+ trillion dollar economy in mind, Xiaochuan said that “We must prevent major mistakes that would lead to irreparable losses, So we are cautious.” Moreover, the Chinese economy has grown very rapidly over the years. In fact, in 2002, it was only the world’s 6th leading economy, but since then, it has climbed to the number 2 spot, still behind the $18+ trillion U.S. economy. However, it is expected to overtake the United States, and become the world’s largest economy in the next 15 years.
Given this impressive economic growth, it is understandable that China would want to sustain this level of growth. There’s clearly no need to get involved in unnecessary risks, including those related to cryptocurrencies and their related technology. which the Governor summed up as follows:
“For blockchain projects with technological potentials, they should conduct thorough testing before rolling out services. Otherwise, a reckless expansion may incur serious security and financial stability issues. Lots of cryptocurrencies have seen explosive growth which can bring significant negative impact on consumers and retail investors.”
Avoid Thinking Of Cryptos As A Way To “Get Rich Quick”
Xiaochuan’s comments regarding the “negative impact” of cryptocurrencies was in reference to the excessive and harmful speculation that investors can be prone to engage in, hoping to get “rich overnight.” The governor’s comments seem reasonable, as even well-known crypto experts, such as Ethereum co-founder Vitalik Buterin, have recently said that cryptocurrencies could drop to “near zero” value.
Therefore, Buterin has gone as far as suggesting to maybe not “invest” in cryptos at all, or only as much as you can afford to lose. Instead, he has suggested that traditional assets are still the best place to keep channel your savings. Additionally, the expert programmer has called on the crypto-community to learn more about the benefits and practical uses of the nascent crypto-technology. He, in addition to many other crypto-experts, have also noted that crypto and blockchain tech need to drastically improved, particularly their overall security.
Given that the crypto industry is still in its infancy, China does not need to act desperately when it comes to adopting this technology, especially since it has a very sound and thriving economy. The country can afford to take its time and thoroughly test, evaluate, and improve upon the existing crypto-tech, as Xiaochuan has suggested. After all, we’ve all heard of the saying: “haste makes waste.”