There is a huge difference between cryptocurrencies and digital currencies. This is according to Fan Gang, a professor at Peking University. Gang is also a respected voice on economic reform in China.
While speaking at the Huawei Intelligence Financial Summit 2021 in Shanghai, Gang stated that cryptos are not currency. Instead, they are an asset class whose value is defined by other asset classes. Gang added that for this reason, it was a highly speculative asset class and cannot function well as a store of value.
Gang also had several other exciting viewpoints about the future of finance. He said that what is happening with currencies like the digital yuan is the digitization of money. He noted that while this process was already happening, the COVID-19 pandemic accelerated it.
Gang said that once this happens, central banks will have the power to monitor the transactions of individuals. At the moment, this can only happen through banks. However, this will in no way affect the operations of banks, and that they would still exist.
He specifically noted that there was no possibility of central banks displacing banks and other financial institutions through the issuance of digital money. He pointed to their inability to offer microloans as the key reason financial institutions will continue to exist. If anything, innovations will come into the market.
His comments come at an exciting time when China is issuing a digital yuan. It has also been taking a hard stance on crypto at the same time.