On August 10, Mu Changchun, deputy director of the central bank's payment department, said at the Yichun Forum of 40 Chinese financial people that the research on the digital currency of the central bank has been going on for five years and is now "out of the box." A stone has stirred up thousands of waves, and while the footsteps of the central bank's digital currency (CBDC) are approaching, cryptocurrencies such as Bitcoin have once again attracted attention.
When discussing the central bank's digital currency with industry experts, some experts believe that the central bank's digital currency is emulating cryptocurrencies such as bitcoin. In fact, it is not the case, and the central bank's issuance of digital currency is much more important to ordinary people than cryptocurrencies such as bitcoin. :
1. The central bank issues digital currency not to imitate cryptocurrencies such as bitcoin.
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As the bank's bank, the country's bank and the issuing bank, the central bank has an important duty to issue RMB, in addition to the functions of macro-prudential supervision and managerial treasury. Let's take a look at the "People's Bank of China" printed on the renminbi: the renminbi is issued by the central bank. The central bank is particularly concerned with everything related to currency because of its role in issuing RMB.
Around 2006, some Internet companies such as Tencent and Sina continued to issue virtual currency such as Q coins and U coins. Even some virtual currencies have been exchanged with the RMB in two ways, which is similar to Libra today. Just as Libra has been raised by the US government. The prevalence of virtual currency such as Q coins has also attracted the attention of the central bank.
That is, since then, the central bank has begun to study virtual currency. The author found that Mr. Suning, the deputy governor of the central bank, also published the monograph "Theory Analysis of Virtual Money" on January 1, 2008. The monograph also proposed "the final issue of the virtual currency is unified to the central bank." Except for the underlying technical details, the virtual currency at the time was not fundamentally different from the current digital currency. In this way, before 2008, the central bank began to study digital currency, and there has been the idea of issuing digital currency by the central bank.
In contrast to cryptocurrencies such as Bitcoin, it is said that Bitcoin originated in 2008 by Nakamoto's paper "Bitcoin: An End-to-End Electronic Cash System" (Bitcoin: A Peer-to-Peer Electronic Cash) System). In other words, Bitcoin and its subsequent series of cryptocurrencies were born after 2008.
Thus, in terms of time, the central bank's research on digital currency and the idea of issuing digital currency are earlier than cryptocurrencies such as Bitcoin. Therefore, the statement that the central bank issued digital currency in the imitation of cryptocurrencies such as bitcoin is also untenable.
In addition, as everyone knows, the underlying technology of many cryptocurrencies such as Bitcoin is the blockchain. On the contrary, from the statement of Deputy Director Mu Changchun, it is highly probable that the digital currency issued by the central bank will not adopt blockchain technology for the sake of concurrency. Therefore, from the bottom of the technology, it is also difficult to say that the central bank is emulating cryptocurrencies such as bitcoin.
In short, the central bank issuing digital currency is not a cryptocurrency such as bitcoin . So, what effect does the central bank issue digital currency have on the people?
Second, the central bank’s issuance of digital currency is of great significance to ordinary people.
The central bank has a lot of meaning in issuing digital currency. The author believes that maintaining financial sovereignty and safeguarding the interests of ordinary people are all significant.
First, as the issuing bank, the central bank issuing RMB is exercising national financial sovereignty. The most concise manifestation is that by issuing RMB, the state can obtain the coinage tax (the income that the government can own from the monopoly of the printing currency). On the other hand, if other entities issue similar payment instruments and replace the renminbi to some extent, the corresponding seigniorage tax will be obtained by such subjects, so that the country's coinage tax will be reduced, which will ultimately reduce the welfare of ordinary people. Therefore, if the cryptocurrency such as Bitcoin is prevalent, and the renminbi is replaced to some extent, it will eventually erode the national financial sovereignty and detract from the welfare of the people. The central bank's issuance of digital currency can hedge or even eliminate the substitution of cryptocurrencies such as Bitcoin for the renminbi, thereby safeguarding national financial sovereignty and safeguarding the welfare of ordinary people.
Secondly, in addition to protecting the interests of ordinary people by substituting hedge currencies, it also enables ordinary people to obtain more convenient and more secure payment tools. With the deep penetration of technologies such as the Internet and mobile Internet, corporate production and personal life are becoming more and more Internet-oriented and mobile. With the deepening of Internetization and mobilization, the payment of banknotes in production and life is declining, and the demand for non-banknote payment by the people is getting stronger and stronger. By issuing digital currency, the central bank has just met the needs of ordinary people, making payment more convenient.
Some people may say that there is no Alipay and WeChat payment? However, it is worth noting that the funds deposited by the people to payment institutions such as Alipay and WeChat are not covered by deposit insurance, while the funds deposited with commercial banks are protected by deposit insurance. Therefore, when a commercial bank satisfies the payment needs of ordinary people based on the digital currency issued by the central bank, it not only makes the payment of the people more convenient, but also ensures the security of funds.
Third, the central bank's digital currency and cryptocurrency are not the same, no hype value
Deputy Director Mu Changchun said that the central bank will adopt a two-tiered form to issue digital currency instead of M0. How do you understand this sentence?
Let us first look at how the banknotes are issued. As the issuing bank, the central bank's printing machine printed the renminbi and deposited it in the central bank's distribution library, but it did not directly give the people. The common people can only go to commercial banks and other financial institutions to take RMB. Where is the RMB of commercial banks placed? The professional saying is called the business library.
When the RMB in the business bank of commercial banks and other financial institutions is insufficient, financial institutions such as commercial banks apply to the central bank's issuing bank for the transfer of RMB. In this way, the RMB printed by the printing machine went from the central bank's issuing warehouse to the business library of financial institutions such as commercial banks, and from the business library to the hands of ordinary people. It can be seen that the issuance of banknotes is actually double-layered. Therefore, the digital currency issued by the central bank is double-layered, which is essentially the same as the double-layered placement of banknotes.
Then look at what is M0, M0 is the cash in circulation, a simple understanding is the banknotes. The central bank issued digital currency to replace M0, which is to replace the banknotes in the hands of ordinary people with digital currency. In this way, the issuance process is the same as the banknotes, and ultimately it is to replace the banknotes Think again that holding only banknotes has no hype value. By analogy, there is no speculation value in holding the central bank's digital currency. Of course, individual banknotes or digital currencies (notes or digital currencies of a specific number) with a specific meaning or the central bank's digital currency linked to foreign exchange.
Conversely, cryptocurrencies such as Bitcoin are issued by market entities or are bound to fiat currencies (such as Libra). The digital currency issued by the market entity is more like a virtual property in nature, and its value is volatile, so it has the value of hype. The digital currency with legal currency is volatility because of the value of foreign exchange, so it also has the value of hype. However, market players are, after all, market players, and all face major problems in whether their business capabilities can continue. Once the business is not sustainable, the prospects for the value of the relevant “currency” are self-evident.
The idea of the central bank issuing digital currency has been around for a long time. It is not a cryptocurrency such as bitcoin. It is not the same as cryptocurrency such as Bitcoin. It cannot be over-interpreted. The issuance of digital currency by the central bank can bring many benefits to the people, but it is not feasible to speculate on the central bank's digital currency.
In fact, in addition to the central bank's digital currency, as early as 2016, the banking industry is also exploring the blockchain. As of February 2019, according to the incomplete statistics of Zero Zhi think tanks, more than 37 banks across the country have carried out nearly 140 blockchain-related exploration practices.
Source: Zero Finance
Author: Chen Xiaohui