PBoC's relatioships with cryptocurrencies have been quite tough lately. Thus, due to the whole China-against-Bitcoin thing, the top cryptocurrency price has fallen. On top of that, according to undisclosed sources, the Chinese government has officially decided to crack down on all Bitcoin and cryptocurrency trading, not just commercial exchanges.
For now, it seems like China is going to go in another direction. On October 12th, Director of the Digital Currency Research Institute at the People's Bank of China (PBoC), Yao Qian, made remarks regarding a centralized state-sponsored cryptocurrency. Please, note, that this is Yao's personal opinion and should not be interpreted as an official stance of the PBoC.
Based on a translation of the report provided by ethnews.com, the man claims that a legal digital currency has a stable monetary value function, and a state-backed currency would provide advantages over Bitcoin, which he referres to as a "private currency." He speculates that a state-sponsored cryptocurrency would create tangible economic values, helping to stabilize the relative position of fiat currencies in the marketplace.
The value of cryptocurrencies such as bitcoin primarily comes from market speculation. It would be a disaster to recognize it as a real currency. And the lack of an anchoring value inherently determines that bitcoin can never be a real one.
Director of the Digital Currency Research Institute at PBoC
Yao also argues that the inherent volatility of Bitcoin "diminishes its capacity to serve as feasible currency".
According to Yao, by creating what would effectively be negative interest rates, it may be possible for the PBoC to reduce its target inflation rate to zero, rather than using an inflation buffer (typically 2 percent).
The whole crytpocurrency society continues to wait and see whether the opinions of Yao will result in policies to be handed down by regulators and the PBoC.