China's central bank should embrace blockchain technology

    Original title: The People's Bank of China intervened in the stock market crash lacking transparency

Yesterday, the news that the Chinese stock market once again demonstrated how fragile the global economy is dominated the news. Trading was halted before the market closed as stocks plunged more than 7% . The early 2% losses worried a fair number of investors, so the early opening of the market was rocky. However, things calmed down once the People's Bank of China intervened and injected money into the money market.

The People's Bank of China intervenes in transactions

According to Reuters, the People's Bank of China also appeared to have prevented another major loss in the CSI300 earlier today. Early trading caused another 2% of stocks to fall, which means another 7% drop on the day is within the realm of possibility. If the incident had leaked, all trading in China would have been suspended the next day.

Thanks to intervention by China’s central bank and securities regulators, early losses were stemmed in due time. However, the People’s Bank of China’s injection of about $20 billion into the money market only reduced losses by 1%.

Meanwhile, the China Securities Regulatory Commission announced that it will further restrict major shareholders of listed companies from selling their shares. The Chinese stock market seems to have calmed down for now, so it remains to be seen whether this announcement will trigger more panic selling in the coming days.

It will undoubtedly be a huge challenge to stabilize the volatile Chinese stock market in the coming months. Government intervention may help the market temporarily, but such actions may also have negative effects. Controlling trading volume is not a wise decision because it may lead to more widespread price fluctuations in the rest of the year.

In addition, rumors of further devaluation of the yuan continue to circulate, although there has been no official confirmation of whether this is true.

Minsheng Bank tried its best but did not give a clear answer on the matter.

Lack of transparency could hurt China's economy

The current uncertainty in China's economy will not help the country's economic development. Government interventions are only announced unilaterally, and the public is not aware of the details. For example, no one knows the exact source of the $20 billion that the People's Bank of China injected into the money market.

To embrace blockchain technology, central banks, government officials, and investors alike should increase transparency in their policies. If the source of funds in circulation can be publicly traced, investors will know exactly what is going on. Keeping it all secret is the last thing the Chinese economy needs right now.