BOAO - The People's Bank of China (PBOC) is studying regulatory rules for bitcoin and stablecoin, said Li Bo, deputy governor of the central bank, at a sub-forum of Boao Forum for Asia annual conference Sunday.

If any type of stablecoin is to become a widely-used instrument for payment in the future, it must be subject to strict oversight like financial institutions such as banks or quasi-banks, Li said in a video speech.

"Stablecoins" refers to digital currency initiatives backed by large technology or financial firms and built on blockchain technology.

Measures need to be taken so that speculation on crypto assets will not cause major financial risks, said PBOC Deputy Governor Li Bo

Li said measures need to be taken so that speculation on crypto assets will not cause major financial risks. These assets are investment options and they are not currencies in themselves, he said.

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If crypto assets are to play a role, they will be used as investment tools or alternative investments. Many countries, including China, are studying the regulatory environment for them, Li said.

There is no timetable for the nationwide rollout of the digital yuan, he said.

The RMB internationalization is a natural process that does not aim to replace the US dollar or any other currency, but to let the market make choices, he said. 

Central banks' monetary sovereignty 'should be respected'

When developing digital currencies, the monetary sovereignty of central banks needs to be respected, and there should not be a one-currency-for-all scenario, said Zhou Xiaochuan, former governor of the PBOC, at the same sub-forum.

Every country has its own macro-control situations and its own monetary sovereignty. Some countries still have certain foreign exchange control, which is not so easy to relax, Zhou said.

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Using central bank digital currencies of different countries for cross-border payments will be complicated because it involves different rules and regulations, he said.

By developing the digital yuan, China aims to upgrade the retail system first, rather than using it for cross-border transactions, Zhou said.

He said improving retail system efficiency is the basis of developing all other businesses. Only on this basis will it be possible for the country to use digital yuan for the wholesale system and cross-border payments.