Market Overview

25 November 2019

Digital currencies to turn official. China leads the way

People’s Bank of China has started a crackdown campaign on digital currency in Shanghai and Shenzhen. Since a legal ban on digital currencies trading was introduced in 2017 most of such “exchanges” moved outside mainland China to Japan or Singapore, even EU and US. The most likely reason for a recent crackdown is to cease any operations in digital currencies to prevent capital flight.

Capital flight from China had substantially decreased to $22 billion in 2018 vs $675 billion in 2016 and $380 billion in 2017. But capital flight accelerated to $139.2 billion in the first half of 2019 amid US-China trade tensions. 

PBoC authorities claimed some 39 “illegal” digital currency exchanges are spotted in Shenzhen only. Many of digital currency exchanges in China are operating on peer-to-peer platforms that enables users to buy or sell digital currencies using Chinese yuan, some offer to buy US stocks using digital currency. Mounting pressure on such firms followed by suspension of exchanges’ accounts with social media like Chinese WeChat and Weibo, local police investigations.


China itself is dedicated to “accelerate the development of blockchain technology”, President Xi Jinping stated late October on Politburo study session. PBoC is likely to launch national digital currency in 2020. The VC of the China International Economic Exchange Center Huang Qifan quoted by Sina Finance saying, “the People’s Bank of China has been studying [digital currency] for five or six years, and I think it has matured. [It] is likely to be the first central bank in the world to introduce digital currency”. Li Wei, the head of technology for the People's Bank of China, the central bank urged commercial banks to increase their use of blockchain technology, the backbone of digital currencies. China's parliament in October passed a cryptography law that will take effect on Jan. 1 and aims to support research into blockchain technology and increase of government regulation of such research. The head of the Chinese central bank’s digital currency research institute, Mu Changchun said in August that such a digital currency is “almost ready”. However, in September, Chinese central bank chief Yi Gang said there was no timetable for its rollout and that it still needed to meet requirements, such as anti-money laundering.

Nevertheless, fears grasped the markets over China’s possible intentions to introduce new, more efficient SWIFT-like technology, a rival cross-border payment system. That could be a further step to undermine US grip over cross-border money flows.


Countries line up to explore centralized digital currencies

Not only China but many other nations exploring benefits of own digital currency. Turkey’s President Recep Tayyip Erdogan announced launch a blockchain-based digital currency after likely by end of 2020.

Swedish Central bank outlined a plan to implement its digital currency, “e-krona”, Bank of England governor Mark Carney suggested that a “private or state-run digital currency could serve as a global counterbalance to the [US] dollar”.

The Bank of International Settlements’ study concluded that of 63 central banks surveyed, 70% are studying possibilities of Central Bank digital currency (CDBC), albeit mostly at a conceptual stage. Most central banks see themselves unlikely to rollout CBDCs in the short term, with the possibility increasing in the medium-long term. BRICS countries are considering launching a joint payment system and digital currency.


Disclaimer:

Analysis and opinions provided herein are intended solely for informational and educational purposes and don't represent a recommendation or investment advice by TeleTrade.

Indiscriminate reliance on illustrative or informational materials may lead to losses.


Lysakov Sergey
Market Focus
Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.
Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade Europe to contact me about the information I have selected.

© 2011-2024 Top Markets Solutions Ltd

This website is operated by Top Markets Solutions Ltd which is registered with the Department of Registrar of Companies and Intellectual Property of the Companies of the Republic of Cyprus as a private limited company with registration number HE272810 and is authorized by the Cyprus Securities and Exchange Commission ("CySEC") to act as a licensed Cyprus Investment Firm ("CIF") with license number 158/11. Top Markets Solutions Ltd operates in accordance with Markets in Financial Instruments Directive (MiFID).

In accordance with CySEC Circular C108, please be informed that the previous name of Top Markets Solutions Ltd was TeleTrade-DJ International Consulting Ltd.

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Top Markets Solutions Ltd ("the Company") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

The Company cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

The Company currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime. The Company does not provide its services to residents or nationals of the USA.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, The Company uses cookies in its web services. By continuing to browse this site you agree to our use of cookies.

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64.90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade Europe strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64.90% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location