China’s central bank is developing its own digital currency, even as it bans bitcoin and private cryptos

China’s central bank is conducting research to issue the country’s own sovereign digital currency, a move in parallel with similar efforts ongoing in Russia, even as the government has doubled down on banning the use and exchange of bitcoin and other cryptocurrencies.

Digital legal tender can help bring down transaction costs, extend financial services to rural areas and increase the efficiency of monetary policies, according to Yao Qian, who leads the research at the People’s Bank of China (PBOC), the country’s central bank.

“The development of digital economy needs central bank-issued electronic currency more than ever,” Yao said during a Saturday forum in Beijing. “It’s crucial to speed up the research and issuance.”

Yao’s remarks are consistent with the Chinese central bank’s governor Zhou Xiaochuan, who said earlier this year that the PBOC was looking into its own digital currency. It’s also a stark contrast to the central bank’s harsh and relentless crackdown on any form of privately issued, or decentralised digital currency.

China has banned any attempt by companies to raised financing through initial coin offerings (ICOs), and stopped bitcoin exchanges from operating on its shores. Already, Chinese financial institutions have been prohibited since 2013 from holding any form of digital currency, and even the room by individuals to hold bitcoin is rapidly shrinking.

The restricted activity has sent the value of bitcoin soaring sevenfold since the start of 2017, with prices at a record US$7,334 each on US exchanges.