China People's Bank digital currency propaganda slogan

This year marks the 20th anniversary of Boao Forum for Asia. About 2,000 representatives from 55 countries and regions attended the meeting and discussed many hot topics including digital payment, "Belt and Road" cooperation and industrial transformation. At the theme forum of "Digital Payment and digital currency", Zhou Xiaochuan, vice chairman of Boao Forum for Asia, vice chairman of the 12th Chinese People's Political Consultative Conference and former governor of the People's Bank of China, expressed his views on digital currency.

Zhou Xiaochuan said:

Both digital currency and digital assets should serve entities. While promoting the development of digital assets, the market should pay attention to the benefits of digital assets to the real economy.

Since the Year of the Ox, cryptocurrency has continued to be hot, and the research of central banks on the central bank digital currency (CBDC) is also in full swing.

Digital currency, the central bank, is called the Central Bank digital currency, or CBDC for short, which translates into digital currency, the Central Bank.

At present, 86% of the world's central banks are exploring the central bank digital currency. Among them, China has started the pilot project of digital RMB in several cities, the Federal Reserve is studying the digital dollar, and the European Central Bank has just finished its public consultation on the digital euro, saying that it will decide whether to start the research project of digital euro in the next few months. It is estimated that the related research will take about two years.

Chetan Ahya, chief economist of Morgan Stanley, believes that digital currency, the central bank favored by the government, is likely to become the new global reserve currency in the future.

In short, if a country's digital currency is recognized in international financial transactions, its issuing country may gain significant advantages in financing costs and financial transaction control, which is similar to the current "privilege" of the US dollar, that is, the status of the international reserve currency.

In this regard, Morgan Stanley analysis believes that central banks will issue consumer-oriented "retail digital currency" and open it to the public through financial intermediaries. The central bank's intention to develop digital currency mainly has the following three points:

1. Monetary sovereignty: Private payment networks have developed rapidly. As they gain market share, these networks can become the main trading means for many users. Central banks are worried that money will almost completely circulate in these networks, posing a threat to the central bank's control over the monetary system;

Second, financial stability: Any potential failure of private digital currency suppliers may destroy the whole payment system and bring risks related to financial stability. Although regulators have taken measures to reduce risks, these risks cannot be eliminated. In contrast, digital currency, the central bank, is created and held by the central bank, which can guarantee its reliability as a medium of exchange;

Third, financial inclusion: the rise of private and narrow monetary networks may exclude some people (such as those without bank accounts). But digital currency, the central bank, like cash in kind, can be widely used, and can even do better in financial inclusion.

However, Morgan Stanley also mentioned that commercial banks may face certain disintermediation risks when the central bank implements digital currency. Because, once digital currency, the central bank, goes online, consumers can directly use the corresponding account to transfer money.

China version CBDC

The China version of CBDC is described as digital RMB, which is issued by the People's Bank of China, operated by designated operating institutions and exchanged with the public. Based on the generalized account system, CBDC supports the "loose coupling" function of bank accounts, which is equivalent to banknotes and coins. It has controllable and anonymous payment tools, value characteristics and compensation functions.

Recently, Li Bo, deputy governor of the People's Bank of China, revealed that the People's Bank of China is considering piloting digital RMB in more scenes and cities.

However, there is no timetable for the official launch of digital RMB. Li Bo said, before the nationwide promotion, we should do a good job in three aspects.

First of all, we should continue to do a good job in the pilot work and expand the scope of the pilot.

The second is to further build the infrastructure of digital RMB, including the ecosystem. At the same time, the security and reliability of the system are further improved.

Thirdly, it is necessary to establish a corresponding legal and regulatory framework to supervise the use of digital RMB.

The real reason for implementing CBDC

The core technology of Digital RMB (CBDC) is "blockchain", which is essentially a decentralized account book and database with the characteristics of decentralization, tamper resistance, openness and transparency. The implementation of digital RMB by the central bank also attracted the advantages of this technology.

In addition, the implementation of CBDC has the following advantages:

First, digital RMB can reduce the cost of printing paper money and reduce unnecessary pollution.

Second, digital RMB can greatly improve the security and anti-counterfeiting level of currency and effectively resist the risk of counterfeit money.

Third, the digital RMB has changed the traditional way for third-party intermediaries to participate in transactions. As long as they have a physical e-wallet and electricity, they can trade directly without connecting to the Internet.

Fourth, issuing digital RMB can effectively balance portability, anonymity and three evils (anti-money laundering, anti-terrorist financing and anti-tax evasion).

Fifth, from a global perspective, issuing digital RMB can also enhance the international influence of RMB. Today, the hegemony of the dollar has not ended because a global system network settled in dollars has been formed, and it is difficult to decouple from it.

Now, relying on the issuance of digital RMB, RMB is expected to get rid of the shackles of dollar hegemony and re-establish a new global payment system.

The future of digital currency

Under the COVID-19 epidemic, global central banks have been at the forefront of digital payment, and the development of digital currency, the central bank, is also advancing steadily.

Wang xin, director of the Research Bureau of the People's Bank of China, said that the design of digital RMB in China is mainly used for domestic retail payment. When conditions are ripe, if there is demand in the market, digital RMB can be used to realize cross-border transactions.

Wang xin introduced that in the early stage, the digital currency Research Institute of the People's Bank of China and the Hong Kong Monetary Authority conducted a technical test on the cross-border use of digital RMB in the Mainland and Hong Kong, which was a routine R&D test of the RMB pilot.

In China, digital RMB is being tried in many areas, including the scene of the Winter Olympics. The test scenarios of digital RMB are getting richer and richer. At present, the digital RMB pilot has accumulated rich experience, and the next step will be to continue to promote the digital RMB pilot and further accumulate experience.

So, what is the value of digital currency?

To return to the essence of money, we must have liquidity and the ability to store and pay. Digital currency is characterized by decentralization and confidentiality. The shortcomings of traditional currency are becoming more and more obvious. Electronic payment is becoming more and more popular. Once the currency stops working, the future digital currency will subvert our lives.

Zhou Xiaochuan once said that for the digital assets controlled by the central bank, a series of technical means, mechanism design and laws and regulations will be adopted to ensure the security of the digital asset operating system. From the beginning, it was different from the design concept of Bitcoin.

As can be seen from the above, the central bank may be the first person who dares to eat crabs. But digital currency is not a specific institution after all, so the general trend in the future is "strict management" from all over the world.

Generally speaking, digital currency, the central bank, is a promising innovation. In the future, the establishment of retail payment system and the optimization of cross-border payment will be the trend and focus, which will create huge business opportunities for the growth of financial services such as digital banking and financial technology.