Financial innovation must be regulated.
At the launching ceremony and the first academic seminar of the Digital Finance Open Research Project held on July 8, Wang Xin, director of the Research Bureau of the People's Bank of China, revealed that the State Council has officially approved the research and development of the central bank's digital currency. Currently, the central bank is organizing market institutions to engage in corresponding work. .
At the meeting, Huang Yiping, a member of the former central bank's monetary policy committee and vice president of the National Development Research Institute of Peking University, suggested that Facebook's launch of a new cryptocurrency is an important alarm for China's digital finance sector. We must be alert to the fact that we have been "overtaking".
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At the 2019 National Monetary and Gold Work Conference held in February this year, Fan Yifei, deputy governor of the central bank, said that it would steadily push forward the research and development of the central bank's digital currency and strengthen the monitoring and disposal of virtual currency.
Libra is an encrypted digital currency project announced by Facebook. According to its white paper, the goal is to build a currency and a financial infrastructure that serves billions of people. Libra has been put on hold for a while, due to the resistance of the US regulatory layer. On July 30th, the US Senate once again held a "digital currency supervision" hearing. Members and practitioners did not reach a clear consensus on data security issues. In the latest company quarterly earnings report, Facebook reminded investors that due to many factors, they may not be able to launch Libra digital currency as scheduled in 2020.
What impact will digital currency have on the current financial system? Will it threaten WeChat and Alipay business? How can the regulatory authorities improve the institutional framework for financial technology regulation? Focusing on these issues, the Beijing News reporter interviewed Huang Zhen, director of the Institute of Financial Law of the Central University of Finance and Economics, Wu Changhai, vice president of the Capital and Finance Research Institute of China University of Political Science and Law, and Chen Wen, deputy director of the Center for Inclusive Finance and Intelligent Finance, Southwestern University of Finance and Economics. And the authority of the mutual gold industry.
How to treat the central bank to promote digital currency research and development?
Supervision should support encouraging innovation under the premise of effective early warning and prevention and control of risks
The Beijing News : The central bank said it wants to promote digital currency research and development. What do you think?
The authoritative person in the mutual gold industry : Digital currency can make trading activities more efficient, and the cost is lower and visibility is higher. If it can be effectively supervised, the central bank's issuance of digital currency can bring great confidence to the digital currency market.
Central bank digital currency interest rates may become a new monetary policy tool. On the one hand, it will help to increase the transmission of central bank policy interest rates to medium and long-term credit rates, and enhance the central bank's control over bank deposit and loan interest rates. On the other hand, the monetary policy of digital currency and legal currency can be different. For example, the legal currency involves zero interest rate lower limit, there can be very little but must be positive interest, but the digital currency can have negative interest rate, break the zero interest rate lower limit constraint, and release the monetary policy space. It will have a greater impact on the economy.
Huang Zhen : The idea of the central bank to issue digital currency was already deployed when Zhou Xiaochuan was the governor of the People's Bank of China. The digital currency research institute was established and the basic conditions were also met. But what technical support is used for digital currency, and what is the positioning, has not yet been fixed. The transformation and upgrading of financial infrastructure takes time and is very difficult. The central bank must support the institutions that can be controlled to participate, and private enterprises may have difficulty participating.
My suggestion is that supervision can't eliminate innovation because of fear of risk. It should support innovation and encouragement under the premise of preventing and controlling risks or monitoring, as well as effective early warning and prevention and control risks. This is the correct way for our country to build an innovative country. , the correct approach. In recent years, in the past few years, we have introduced some policies that may have hurt innovation. I hope that through Libra's plan, our supervision, our policies will be reflected, adjusted, and optimized.
Chen Wen : The central bank's digital currency should be considered as a supplement to the base currency. However, like the previous central bank issued the base currency, it must be finally put into the market. In fact, it is necessary to use the bank as a channel provider and the micro-subject of the bank to be a channel. However, like the issuance of digital currency, it can directly target ordinary people and non-business enterprises. Conduction link.
Wu Changhai : It is too early to discuss the legal digital currency. We are always surprised by the new things in the outside world. Why? Because we have not really studied the series of problems of digital monetization from a strategic perspective.
Will Internet giant hair coins hit the existing currency?
Without supervision, it is impossible to replace legal tender at this stage.
Beijing News : Will Libra have an impact on the legal digital currency after landing? At the hearing, Marcus always stressed that his competitors are not legal coins, but Alipay and WeChat.
Mutual gold industry authority: First of all, the emergence of Libra will profoundly change the international monetary system, adjust the world financial structure, and intensify currency competition. Once Libra is widely used, it will become an international reserve currency. Libra actually poses a challenge to the existing monetary system, especially to the dollar's world currency status.
At the same time, the supervision is difficult, Libra proposed to help more than 1 billion people without bank accounts into the global financial system. Since the cryptocurrency is still in the gray of regulation, the decentralized cryptocurrency is easily exploited by criminals. In recent years, data security and user privacy have been the focus of the world, but it is also a very complex issue that requires multi-dimensional solutions. Data owners (users) need to find a balance between ease of use and sacrifice of privacy. Data users (enterprise) should be more tempered by the excessive use of data after receiving user data.
Fundamentally, Libra is still only a special token used in a specific online community or business district. Since it is a token, the possibility of coexistence with a legal digital currency is not very optimistic. Regardless of whether the virtual currency will form a pattern of coexistence with the legal currency, as long as it appears in the form of currency and forms an alternative relationship with the legal currency, it will always be unable to circumvent the regulatory issue.
One of Libra's goals is to provide online business and financial services to the 1 billion people outside the banking system at the lowest cost. This undoubtedly increases the difficulty of supervision, and it is bound to attract more stringent and strict supervision by financial regulatory agencies in various countries during the promotion process. At least under current conditions, a “global currency” that is not regulated by governments is unlikely to be accessible in countries around the world. With the deepening of economic globalization and the advent of the 5G era, the "digital ecology" trend is the trend, and the future digital currency will be the inevitable choice of reality. Perhaps in the future, it will form a pattern in which legal digital currency and a few digital stable coins coexist.
Huang Zhen : Libra's release is not enough for the sovereign countries. Based on the worldwide digital trend, a worldwide digital currency may be needed. Sovereign countries are now also thinking about how to deal with this problem. The release of Libra has had an impact on the digital currency of sovereign countries, so it is not only aimed at payment institutions like Alipay or WeChat payment, but more importantly it leads to a financial infrastructure, which is not only the issue of currency or payment functions. It also includes a series of functions such as clearing and settlement.
Trump's rhetoric on Twitter is indeed a huge impact on Libra's currency. Because the current governments, congresses, and monetary authorities of various sovereign countries are issuing legal currency based on the credit of the entire country, which has a huge financial and financial effect. The entire country’s economy is running, and if you leave the currency, you can’t imagine it, especially the dollar. If Libra becomes a world-wide, new alternative currency, it may indeed be like the US Congressman who will impact the US monetary policy and the status of the US dollar, and it will also impact the US's global hegemony and affect the United States in the world. The economic chain is currently at the top.
At present, the monopoly formed by the continuous expansion of super-large technology companies has emerged. The United States is still based on the existing legal system. For example, Trump requires Libra to issue a license. To apply for a banking license and to operate the relevant business, it is necessary to obtain regulatory approval. This is why the current currency program is difficult to advance. For example, all financial services in China need to be regulated and license management must be implemented.
Chen Wen : Libra is directly involved in the personal and corporate sectors, and has a comparative advantage in the field of cross-border payment settlement. The convenience of mobile payment in the United States is far less than that of China. When Alipay and WeChat payment have been very convenient, Libra has little room for development as a payment settlement tool in China.
Internet giants like this, Tencent and Ali also have a large number of users. If these global Internet giants issue their own virtual digital currency, they will replace the application of legal currency. For example, Ali issued a digital currency, which will definitely give priority to users of Taobao and Alipay. This means that if there is no restriction on the encrypted digital currency of the giant hair, it is possible to form a situation in which mainstream countries, relatively stable legal currency and such encrypted digital currency coexist. In some countries with particularly high inflation, the people are reluctant to go to the currency, but because the exchange of dollars is regulated, it is possible to use an encrypted digital currency like Libra. If the local government does not have good control, there may be a currency that will be shocked.
Wu Changhai : Internet companies issue virtual currency. In the United States and in China and other countries, under the existing national governance model, it is impossible to impact or replace legal currency.
Encrypted digital currency, especially the stable currency represented by Libra, cannot and cannot replace the legal digital currency. The legal digital currency is a substitute for banknotes and is issued by the central bank. The general encrypted digital currency itself does not have a monetary function, and the government cannot put the currency. The idea of issuing rights to a company is impossible to achieve for a long time.
However, under the continuous development of artificial intelligence and digital economy, the virtual currency issued by enterprises will replace the function of money locally. This is a development law that humans cannot prevent. It is unrealistic to discuss the encryption of digital currency instead of legal tender at this stage.
How to improve the financial technology regulatory framework?
You can use the "regulatory sandbox" to avoid one-size-fits-all
Beijing News : After the emergence of Libra, how can the regulatory authorities improve the institutional framework for financial technology supervision?
Authorities of the mutual gold industry : The regulatory authorities can implement “enlightened supervision” to avoid a one-size-fits-all approach. Legislators, regulators and enterprises conduct effective communication and consultation, test each other, play games, test boundaries, and open up market space and legal space for new technologies. In this process, regulators are gradually adjusted to regulatory policies. A two-way interactive process.
The concept of “regulatory sandbox” can be applied. The “Regulatory Sandbox” is a “safe space” in which financial technology companies can test their innovative financial products, services, business models and marketing methods without having to be subject to regulatory rules immediately when problems arise. Constraint. Under the premise of protecting consumer/investor rights and preventing risk spillovers, regulators will reduce the regulatory barriers of financial technology innovation by actively and rationally relaxing regulatory regulations, and encourage more innovative solutions to actively turn ideas into reality. In this process, we can achieve a win-win situation in financial technology innovation and effective management and control risks.
Huang Zhen : It may be a stratified governance now. It is still difficult to form a unified framework. However, based on its transnational cooperation in sovereign countries and the coordination of international organizations, the standard for such data governance, The rules guide is now being explored.
The second is based on the fact that these data can be further explored, analyzed, developed, etc., and need to be guided by industry. Because at present, everyone realizes that data is not only a resource, it is also an important economic form. The development of the digital industry is not only based on personal data information, some regulations on protection, but also Industry guidance, industrial planning, etc., are more conducive to helping its development. At the same time, for the monopoly or competition that the industry may bring, these problems must be pre-judgmented in advance.
Wu Changhai : Financial technology is an auxiliary means of financial innovation. Therefore, financial technology cannot replace finance. Whether Libra can be attributed to the judgment of financial technology is whether it can serve financial services and finance innovation. This finance must be The monetary system in the national legal sense. In fact, we have learned the lesson and conflated financial technology with finance. As a result, financial risks and wealth were illegally distributed and transferred, leaving the real economy and causing major losses.
Chen Wen : Generally speaking, in the field of scientific and technological innovation, it is about subversive innovation, which is different from the previous value scale. Most innovators are dead, and only a few survive. For example, group buying websites have experienced thousands of battles. After that, only the US group and the public comment are left, but this is not suitable for financial innovation. The social harm is too strong, and financial innovation must be regulated.
Now that financial technology is a big business, there are some preliminary subdivisions, but it is not very clear. At the same time, around the financial technology innovation, which modules can be put on the market, which can introduce some relatively controllable, audited entities to innovate, which should be led by the government, I think it should be done A distinction.
How do China's financial technology face challenges?
Facing the impact of digital currency on the traditional financial system and establishing a reasonable risk aversion mechanism
The Beijing News : If Libra successfully landed, will it form a corner overtaking for China's current dominant position? Next, how should China's financial technology respond to a series of challenges?
Mutualists in the mutual gold industry : Today, with the emergence of Libra and the continuous development of encrypted digital currency, we should take the initiative to participate in this new digital economy competition. We should further liberalize the academic and technical discussions on encrypted digital currency and rapidly upgrade China's related industries. The level of understanding of the digital economy competition. Enhance the sense of crisis, face the impact of digital currency on the traditional financial system, establish a reasonable risk aversion mechanism, and allow enterprises to try within a certain scope.
Huang Zhen : At present, the technology of China's blockchain enterprises should be said to have certain advantages in the world. One is the number of patent applications and the world's leading technology. At the same time, there are many projects in the blockchain. For example, based on the application of the billchain in the financial field, the advantages of China's blockchain technology and the backwardness of the system are in stark contrast. .
After Libra was released, Ma Huateng’s words were very incisive. This kind of currency technology has long been available, and the key is supervision. Our country has recently been at a stage of rectifying Internet financial risks. It has adopted high-pressure supervision and strict supervision on Internet companies' participation in finance, especially in the development of currency. At present, the government has stopped the construction of such structures, projects, activities, etc. in the name of the block in China.
Maybe the users of WeChat Pay and Alipay add up, there are no users of Facebook, and more importantly, compared with the centralized technology of Alipay and WeChat applications, Facebook adopts the new distributed encrypted ledger technology, which will make payment. The speed is greatly accelerated, the cost is reduced, and the existing advantages of Chinese payment companies may all be swept away.
Chen Wen : I don't think I have to worry. Unlike the chip and other fields, Libra is not a technical breakthrough in itself. The technical threshold is not high. If the Chinese regulatory authorities allow it, Ali and Tencent will definitely get faster, the technology will never fall behind, and the user base will be quite a lot. Moreover, the impact of Libra's issuance on the domestic market will be weak. First, the domestic customer base is not enough. Second, Alipay WeChat in the domestic payment field is doing very well, and Libra has few usage scenarios.
Wu Changhai : Still, financial technology is serving a country's finance. Libra is not a financial technology, and if it is, it must also serve the US financial or the United States. Libra itself has no connection to the legal digital currency. The legal digital currency issuance is a major trend in the digital economy. Central banks are considering the issue of digital renminbi, which faces three major challenges: first, technical problems, second, voluntarily flowing under renminbi capital, and third Use digital currency to commit crimes, etc.
Beijing News reporter Zhang Yixin Chen Peng edited Li Weijia to Xue Jingning
Article from: Beijing News