Foreign media: bitcoin will pose a threat to Chinese economic security?

Foreign media: bitcoin will pose a threat to Chinese economic security?


Dr. AlessandroArduino is the Shanghai Academy of Social Sciences (SASS) director of security and crisis management of the project, or the Singapore Rajaratnam of Nanyang Technology University Institute of International Studies (RSIS) senior researcher invited the Chinese project.

In this paper, Arduino describes the Chinese plays in the global digital currency market and the role of domestic investors and regulators will affect the development of the market.

At the beginning of 2016 China two times in a row after the market collapse, forcing the regulatory intervention on the Shanghai and Shenzhen stock exchange.

As for the stock market bubble in 2015 of the same China regulators also took the same measures to intervene in the market to organize the recovery plan. Although the people’s Bank of China (PboC) in January 5th after the market crash into a $20 billion, or RMB has been devalued.

While gold investors in uncertain times and trustworthy commodities, gold prices in that period.

At the same time, the use of virtual currency re encryption and block chain technology (bitcoin), but also because of Chinese investment appreciation.

Encryption currency and capital control

In 2016, a crypto currency vulnerability in China economy and uncertainty is likely to continue to increase.

On Chinese, security problem is a large range of threats. The solution to the outflow of funds related to bitcoin is to rely on these tools to avoid China strict capital controls.

Another concern is the possibility of the collapse of the virtual Ponzi scheme. 这是基于虚拟货币容易获利的可能,从而吸引越来越多中国社会群众使用储蓄参与投资。

The use of virtual marketing Chinese financial regulations in the gray area, in the case of a crash will have a Domino effect, in a few hours if light inartful Chinese investors life savings.

These fraudulent schemes collapse, even more legitimate funds associated with bitcoin internal collapse, may lead to serious social unrest, even worse than the October 2007 stock market crash consequences.

For a long time, the use of bitcoin always affects the China security threat. These threats include the shadow economy growing in China the lack of accountability, and bitcoin may be financial terrorism and illegal activities (such as kidnapping) provide additional tools.

For example, the last month of 2015, the senior Hongkong tycoon Huang Kun to kidnap, put forward high bitcoin ransom the kidnappers.

In 2015, China government backed securities market from the way of capital inflows to short sellers (limited to profit from the decline in the market traders) punishment.

In 2016, the government’s choice is more limited, because the trade surplus is decreasing and the provincial government of the state-owned enterprises and the non-performing loans bubble economy is likely to produce, which can absorb a large number of savings surplus.

With the devaluation of the renminbi, online bitcoin exchange of Chinese (such as BtcTrade) with bitcoin on the dollar exchange rate changes and the growing popularity of.

The devaluation of the RMB will attract more and more Chinese bitcoin form to reserve assets.

RMB and currency link encryption

In order to alleviate the concerns of some western countries, Chinese need to take more measures to solve the non-standard use of digital currency, especially money laundering and terrorist financing.

Anonymity is the basis of encryption currency, but it is easy to be abused, so in the development of new regulations and policies must be considered.

However, bitcoin is just a kind of value transfer media, does not need the stigma covered “terrorist money”. In this regard, calling for bitcoin is illegal is not realistic, this is the equivalent, because the dollar is the currency of choice for Global trade in drugs and weapons so you should disable dollar.

Taking into account the RMB with bitcoin, it is possible to infer the future, Chinese regulatory policies will have a greater impact on global value of bitcoin.

The focus of the people’s Bank of China currently include the volatility of the RMB, restricting the additional pressure to limit capital outflows and currency devaluation, there is an urgent need to find Chinese long-term treatment method of encryption currency, especially for its use in the illegal.

Because of the huge economies of scale, now Chinese on the global financial system has an important influence. At the same time, China bitcoin value and influence is also growing rapidly.

Chinese therefore bear responsibility to provide practical solutions, which can even legitimate uses of encryption currency management.

The first chapter is part of RSISCommentary, which was founded by the S.Rajaratnam Institute for international studies to provide policy relevant comment platform. The article has been published permission from the author.

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