Article source: Sina Finance original title: "Shao Yu: If Libra succeeds, it will create an ultimate corporate empire"
From September 20th to 22nd, in the Moganshan, Deqing County, Zhejiang Province, the 10th New Moganshan Conference (2019 Autumn Forum) and the 35th Anniversary of the Moganshan Conference were held. With the theme of "Understanding and Responding to the Great Changes in a Hundred Years", this seminar has in-depth study and understanding of General Secretary Xi Jinping's judgment on "a major change in the past 100 years", the impact of the new scientific and technological revolution on humanity, and China's reform and development. In-depth discussions on the times and other aspects.
On the afternoon of the 20th, the sub-forum "Digital Finance: Trends and Challenges" was held. The Digital Finance Sub-forum focuses on the current digital financial hotspot issues, focusing on new concepts such as distributed digital finance, digital assets, and open finance, and substantively exploring the potential and direction of digital finance.
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Shao Yu, chief economist of Orient Securities, attended and delivered a speech entitled " Digital Currency Hegemony – Super Commodity Currency and Super Sovereign Currency ".
He said that if you just talk about money, there is no value. Blockchains, artificial intelligence, digital currency, they will become the new technological revolution value measure, payment means, wealth reserve and world currency, which is the new world of the future digital currency that everyone hopes to see.
The following is a speech record:
good afternoon everyone. Indeed this is a very complicated issue and it took me a long time to prepare such a speech.
We are familiar with the original goods, either the commodity currency gold, silver, and French currency (sovereign currency). If the new digital currency is only bitcoin, based on the algorithm, its total amount is limited, no problem. But if it is like Libra or the central bank's sovereign currency, this thing is different.
The problem is that it's a truly new algorithm-based or trust-based consensus , or based on a tangible tradition of accumulation, just an upgrade, which is a completely different path. So how do you distinguish the difference between the heads here?
First of all, we must admit that because of the current state, the mainstream of the future currency must be digital currency , but it is not sure whether it is the sovereignty of the central bank, or Libra commercial, or all open source or all decentralized, more like the original private currency. .
In fact, the speed of this evolution is not very fast. The blockchain has a history of ten years. There are many problems in the past. Frankly speaking, if non-sovereign gold and silver are actually, Libra is also, but they are based on a derivative system. same. I have talked for a while that Libra is a compromise. It must be approved by existing stakeholders to move to a higher level, but one day it will be separated from its mother. The digital currency must have evolved in this way.
The basis of each different currency has different theories, and the theory can support the development of the entire economy. For example, gold and silver are very simple, a simple quantitative theory of money, coupled with the so-called gold transportation point, we can get the exchange rate and get the interest rate. But the variability of the problem is completely mutated from the beginning of the credit currency or sovereign currency. The impact of this variability is too great, we have no way to control it now, or completely out of control.
We know that credit currency is a dual structure. Theoretically, high-energy money is determined by the central bank of money controllers, but broad money is based on animal spirit. How to create it? M2 is actually endogenous. In the event of a crisis, everyone knows that the central bank will definitely come forward, because at that time the animal spirit of the entire market was completely scared, you can only take the Cairns road, in fact, it is still like this.
Going down, we see that in the case of sovereign credit currencies around the world, what do we see more? It is the illusion of money, the bubble of assets, the Ponzi scheme, and even the bankruptcy of the country, but this Pond's may be played by sovereign economies.
The current state of debt savings, and the way to save the crisis over the past decade, is ridiculous. The past crisis was due to the release of too much money before 2008, and the way to save the crisis is to release more money, everyone knows Now that the entire economy is going to enter a new round of recession, what is the only action that everyone has done? Reduce the interest rate and continue to release water.
There is a big problem here. This is because we are now based on the whole credit theory. Debt is the same as currency, because credit creates debt, so the result is either inflation, which is in Germany. The situation encountered in 1923, because of insufficient capacity. The second is the bursting of the bubble. Of course, this is constantly appearing, and the country is bankrupt. Unless you are a sovereign currency, that is, the sovereign currency of the global reserve is like the United States. Everyone knows the debt of the United States. Why is there no problem? Because he can choose, you can't choose cosmic coins, the United States is the biggest last credit.
Let's take a look at our current problems. Frankly speaking, we are based on a very wrong identity, which is such a famous identity. Everyone is saying that in the credit economy, the broad money M2 = GDP + CPI + asset CPI , this It is a classic fallacy.
Quite simply, we feel that most of M2 should be digested for our GDP+CPI, the nominal output, and the rest will go into the asset bubble field. Let's look at the sample of China over the past 30 years. The blue line represents our ability to create wealth (nominal GDP), the red line represents M2, which is the ability to create money. In this GDP, we generally think that it may enter the bubble field, no, because this way, only An additional 5% of the money supply will enter the bubble sector, as there is evidence that the top 10% in M2 is the creation of GDP, 10% into CPI, and 80% into asset prices, which is a major fallacy.
You can imagine that when the nominal GDP growth, the last quarter is still around 8.5, when our M2 value becomes 8, there will be a variety of financial chaos, including running, the reason for running is not out of the central bank. The digital currency, but the rapid tightening of liquidity . The first reaction you see is the reaction of the financial market and the de-bubble of the bubble. The real economy is of course the same.
So we are trapped in such a wrong credit economy model or formula, and more importantly, we live in a huge currency illusion, and these currency illusions are of course derived from the speed of the credit system or its own expansion, over the past 40 years. Inside, our economy has expanded 240 times, which is amazing. This is a miracle of China. What we wear, the wealth of these materials we created 240 times, and the money we put out is as high as 1500 times, which is the dilemma of our credit currency. Not only China, but the world is the same.
Why is the so-called neutrality of monetary theory wrong? Because it is absolutely impossible to be neutral. In the short run, it is not neutral in the long run. Where is the foundation of macroeconomics? There is no more, and there is no way to judge who can get the greatest wealth here, it will definitely cause differentiation, but will the technology elite or technology bring a better world? We must be especially careful when answering this.
Regarding the classification of digital currencies, we put forward our point of view, which is what Libra thinks. In fact, Bitcoin is not particularly worried because of its total amount of problems. But Libra is different. If the central bank is so unreliable, then will the company be more reliable? Enterprises will pretend to be more reliable, based on what? Based on SDR, the so-called ESDR, does not use distributed technology? It will be used, it emphasizes that it will be handed over after five years. Now it is based on its own network, its own users, plus 100 big players. Now it is 24 big players, which constitutes a chain of alliances. But its compromise with reality is to take real assets as a mortgage 1:1 issue.
I understand that it is the language that defines Move, and such asset packages are constantly moving , but this move may have an algorithmic advantage, that is, it is difficult to have many vulnerabilities, such as vanishing or being attacked. Of course, this depends on how wonderful the 26-year-old programmer wrote, and of course I am not a technical expert. This is a simple understanding of me.
But is the ESDR based on multiple currencies issued by 100 companies more reliable than the SDRs issued by several major countries? Everyone knows that SDR is basically finished. In addition to using the clearing between the top countries, it is useless. Later, it was found to be useless. Because in the crisis, everyone simply abandoned SDR and directly exchanged the powerful currency. Made a swap, the Chinese yuan is also being exchanged.
If Libra succeeds, this is a watershed, it will create an ultimate corporate empire, it does to remove the political centralization of sovereignty, but strengthens the business center, it will become Libra's optimal currency zone (similar to the euro).
But it is unstable. Unstable is not only due to the instability of the architecture, but also what kind of frame it uses to form the SDR basket. More importantly, if he sends it, I estimate that Google will also send it. Tencent and Baidu will also And it is estimated that we will support them, which in turn becomes a constant competition for each different currency area in cyberspace, just as we see thousands of currencies constantly competing here, ultimately depending on the alliance chain. How big is it? How widespread is the underlying application scenario? And who is the last lender?
Now everyone knows that Facebook's 500 billion market value is not too big, but we have also seen the company with a large market capitalization, and finally disappeared into zero. Who is going to cash it at that time? That is to say, such a digital currency, which replaces the physical currency, gold and silver, also replaces the sovereign currency. In short, it challenges the existing monetary authorities and the distribution of significant interests behind them. Of course, we think that perhaps the algorithm represents a higher level, a language that everyone can share, and so is the network. It is more of a kind of trust, and trust is probably an algorithm.
We used to be based on real money and silver, and later based on the sovereignty of trust, now clearly have failed us, can digital currency live up to us? Tell everyone that all technologies have their own abacus, no matter how universal or human elite they pretend. In fact, Libra may also succumb to the demands of capital and the dark things in the elite.
Where do we think key changes will occur? Assuming that we can start slowly operating through various regulations and start user conversion, we feel that the fifth year is the real key , because it promises to abandon centralization and become non-licensed in the fifth year. , surrendered control, became a real bitcoin or algorithmic currency, this time may be the beginning of a huge watershed.
Frankly speaking, if it really surrenders such things, its power is not enough to make everyone worry, because it has been made public, there is no self-interest anyway, but what kind of problems will occur at such a transition? As the central bank launches digital currency, what kind of major changes will be triggered, we must be careful to observe.
Finally, what should we do in such a complicated situation? How to deal with it? How to react to it accordingly?
First of all, just like SDR, China can ask for more shares , because there are 100 nodes, then you are willing to put China's important nodes here. It’s not that it’s universal, open, and finally rushing to a distributed network. Can it be open to the Chinese? This tests its ideal purity of the touchstone.
The second of course BATJ can enter , because 10 million one, can enter, first occupy a pit, is such a logic. Why did this cause a more intense reaction from the global central bank? Including China is now very OPEN, in fact, China will definitely put the Chinese Internet giants with the central bank to issue a digital currency for all social applications in China. The 100 that Libra is looking for, now 24, are basically in key non-financial giants, such as taxi scenes, credit card scenes, remittance scenes, our e-commerce scenes, social scenes, and exchange scenes. These are formed. It applies more of a good ecological structure.
On the other hand, I am in the Yangtze River Delta, because we have a relatively adequate infrastructure, and there are many applications, can not learn like Libra. Of course, the Internet giant is ahead, which may come from the industrial industry, because it has more application scenarios, such as supply chain, in the bill, in credit, in bond, and in land security. A full application scenario allows such a digital currency to operate and operate in a coalition manner. We can also assume that it will be open to other key players in a decade or become a completely decentralized system.
Finally, we judged this way. The competition of the central bank's digital currency is the sovereign Libra . I agree with what I just said about the rock. It is actually M0, but is it so fierce to cancel M0? I don't think I am so worried. Because he said, it is M0, why can you only limit M0? Quite simply, he has to do something like this. M2 is handed over to the animal spirit and handed over to the commercial bank itself, depending on the endogenous nature of your economy.
If you do something with M0, you can do a lot of things, such as peer-to-peer compliance issues, anti-money laundering issues, and even negative interest rates. It is reluctant to intervene to a higher monetary derivation level, because it will trigger a comprehensive peer-to-peer control of the entire central bank. It was too difficult to imagine at the time, and it was not able to do so.
We may have to use a more open vision. It used to be technology that could not be used by others. It used to be a ship and a gun. Now it is a digital currency. Of course, it is essentially the competition between technology and the industrial revolutionary forces. In this respect, we are not only internationalizing the RMB, not only To do the application of RMB to overseas, the traditional hegemony constantly adjusts its currency internationalization, and it must also be applied digitally. In other words, you can also consider the SDR or ESDR solution, not to take the RMB line.
If we only talk about money and have no value, in the past 70 years of successful Chinese experience, we successfully passed the first and second industrial revolutions. Who will become its infrastructure in the new round of industrial revolution? Blockchains, artificial intelligence, digital currency, they will become the new technological revolution value measure, payment means, wealth reserve and world currency, which is the new world that we hope to see the future digital currency.
This is my speech, thank you all.
Question 1: Today Shao Yu’s point of view is very good. It is the kind of thinking that I have seen so far in China about Libra. I think it is the most practical and feasible. My problem is that there should probably be how to deal with anonymity and encryption. In fact, technology is a new type of digital currency that transcends countries and enterprises. It may form a strong dark economy.
Shao Yu : It must be like this.
Question 2: Just now you mentioned that our digital currency is limited to M0, but I am thinking that if a financial institution gets 10 billion M0, I will mortgage this money to another financial institution. I will get my money and go. To this M0, in this way, the two financial institutions can indirectly expand the money indefinitely, and finally achieve a leverage effect, so that you have extended from M0 to M1 or even M2.
Shao Yu : Now M0's ability to expand in the whole M2 is very limited. Its entire expansion is due to the release of high-energy currency, not M0. M0 is a form of banknote. The key is the central bank reserve holding level and preparation. The adjustment of the gold rate is the basis of the expansion; and whether it is cash or not, the relationship is not that big.