China is reportedly considering launching its own virtual currency, having clamped down on Bitcoin use in the country. According to a report in The Register, China’s central bank is looking at virtual currencies as a means of exerting more control over the country’s money supply. In addition, it hopes a virtual currency would help cut costs related to handling paper money.

The People’s Bank of China (PBOC) has been researching digital currencies since 2014, and the initial results are said to be “encouraging”. A report (Chinese language) on the PBOC’s website says researchers should “set up clearer strategic objectives for launching digital currencies, and overcome the technological barriers” prior to launching their own, central bank-controlled take on Bitcoin.

Some of the biggest benefits would be a reduction in tax evasion and money laundering. Economic activity would also be made “more transparent”, the bank said.

The PBOC will work with both local and foreign financial bodies in order to integrate digital currencies alongside traditional card-based payment systems, it added.

China was at one time the largest trading market for Bitcoin in terms of volume, and it’s widely held that Chinese buyers were responsible for the stunning Bitcoin boom in 2013 that saw the cryptocurrency’s value hit over $1,000. However, Bitcoin’s popularity (and value) dropped significantly when the PBOC issued a notice that prevented domestic banks and third-party payment providers from trading it.

As such, this latest announcement marks something of a U-turn by China’s government, said Hao Hong, chief China strategist at the Bank of Communications, in an interview with the South China Morning Post.

“The attitude towards digital currency in China has been shifting, it has been surprising,” Hong said. “Back then it was quite hostile. Now, facing capital outflow pressure, a digital currency would make it easier to check the capital flow.”

If China does move to launch its own digital currency, it would not be an unprecedented one. Ecuador became the first nation in the world to issue a government-backed digital currency last year, telling all of the country’s banks to get onboard.

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