China’s central bank is making a lot of noise about cracking down on bitcoin just weeks after the president of China hailed the blockchain.
This apparent difference between lawmakers and central banks is a new revelation of sorts for the millennial generation regarding our governance system.
You see, whether in China, in America or anywhere else, the central bank is “independent.”
Independent of who is the obvious question, with the answer being nothing else than independent of the people. Then who do they answer to?
Presumably their boss is Agustín Guillermo Carstens (pictured left), the general manager of the Bank of International Settlements (BIS). BIS is summarized as:
“An international financial institution owned by central banks which ‘fosters international monetary and financial cooperation and serves as a bank for central banks’.
The BIS carries out its work through its meetings, programmes and through the Basel Process – hosting international groups pursuing global financial stability and facilitating their interaction.
It also provides banking services, but only to central banks and other international organizations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.”
An official of the South African central bank let it slip last year during a public demonstration of a blockchain project that central bankers had been discussing bitcoin at BIS in such detail that they had decided even such mundane things like what to call cryptos, crypto-assets not cryptocurrencies.
Before PBOC revived front and center its digital currency plan, Carstens told FT that global central banks may have to issue their own digital currencies sooner than expected primarily because of Libra.
As the job of BIS is to coordinate between central banks, then presumably they have a division of labour setup where to not replicate work one bank, for example, does this digital currency stuff and then shares it with others.
There are a few banks ostensibly working on a crypto-like currency, but PBOC was first and thus is presumably the furthest towards potentially implementing it.
PBOC was also the first to enact something very strange. The central bank apparently has the power to issue diktats where monetary matters are concerned.
It is by this PBOC diktat that they closed crypto exchanges, not by any law. The ostensible recent “crackdown” is also from PBOC, not the Chinese government. Local media reports according to a rough translation:
“On November 22nd, the Shanghai Headquarters of the People’s Bank of China published an article entitled ‘Intensifying Supervision and Control to Fight Virtual Currency Transactions’…
Continuous monitoring of the virtual currency business activities within the jurisdiction, once found to be disposed of immediately, play early and small, prevent problems before they happen.”
The second paragraph obviously means continue to monitor and catch them while they’re small, with some fraud related projects apparently being made an example.