Zhu Min: Libra may bring 4 kinds of subversion, 7 opportunities

Text / Sina Finance opinion leader columnist Zhu Min

The Libra coin was born and opened the corner of the new international financial system revolution. The Libra white paper of Libra indicates the beginning of a subversion and reconstruction, and the drama is opening. We should not overestimate Libra's technology and potential 2.7 billion customers, nor underestimate the challenges and risks that Libra faces in its development and operations. But most importantly, we should not underestimate the depth, breadth and speed of this change.

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On June 18th, Facebook published the Libra white paper, which was a high-profile announcement of the cryptocurrency-based payment field, which triggered a hot debate in the world. As an upgraded version of the digital currency, Libra has the functions and potential of cross-border payment, super/cross-sovereign currency, and new financial ecology. As a result, Libra has proposed a future vision of world finance with extremely imaginative space.

Because of this, the concept of Libra Libra immediately faced the constraints and challenges of four dimensions of technological innovation, commercial competition, regulation and government/sovereign conflict. It is precisely because of the above four factors that the development of Libra Libra will inevitably be a gradual and intense process of market competition and regulatory coordination.

My strategy for reading Facebook is to use its monopoly of technology and market to make people first and raise the banner first, but to develop small-scale, gradually commercialize, and carefully balance the four dimensions of technological innovation, commercial competition, supervision and government/sovereign conflict. The challenge is to find opportunities in development and gradually advance. But we can't underestimate the possible impact of Libra and the possible speed of change. First, the scene of Libra's development is quite broad; second, the basic leading force of today's world transformation is technological innovation, globalization and bottom-up large-scale consumer/public participation. Libra just aggregates this. Three forces. The revolution triggered by Libra Libra must be subversive. Globally, driven by the market, its rapid development may exceed our imagination.

Libra's white paper opens up a new global competition. In view of the possible future development of Libra Libra and the possible impact on national legal currency and international financial system, and thus the challenges of China's payment system, capital control, financial system, RMB internationalization and financial and economic security, especially In the context of current Sino-US economic and trade and political friction, Libra actually strengthens the hegemonic position of the US dollar, and we cannot take it lightly on its advent and possible future development.

China's theoretical R&D and testing of central bank digital currency has advantages in the international arena. China's electronic payment system also has advantages in the international market in terms of electronic payment infrastructure, customer scale and operational experience. We are almost at the same starting line in this field and the world. The Libra white paper actually provides us with a golden opportunity to enter this new future international financial and currency market open competition.

China can't stay out of the game, and must actively participate in the competition and construction of this global financial restructuring, not only seize the opportunities, but also steadily and steadily advance. In view of the great uncertainty of this subversion, our strategy can be: raise the high flag, stabilize the camp; observe the chaos, follow the trend; deep reform, push R & D; broad alliance, new system.

First, first, we will fight against the point, raise the banner, establish a new generation of payment/digital currency system in our country, and meet the challenge of Libra, and actively arrange it; but watch the global competition progress, move forward cautiously, steady Stabilize. Second, speed up the reform and steadily accelerate the reform of China's capital account opening and RMB convertibility under the challenge of Libra. Third, the overall layout, on the one hand, accelerates the research and development and landing of the digital currency of the central bank in China, and accelerates the expansion of the internationalization of the RMB in a new online dimension. On the other hand, it will increase the reform and research on policies, planning and supervision of the existing electronic payment market in China. Fourth, a broad alliance, in conjunction with Singapore, Sweden, Switzerland, Canada, the United Kingdom and other countries in the forefront of the central bank's electronic money research and development, and promote the international central bank digital currency in the framework of international financial organizations such as IMF, BIS, FSB, etc. And the construction of regulatory and governance mechanisms for cross-border digital payments.

In this way, the central bank and the market go hand in hand, the reform and supervision are synchronized, domestic and international coordination, double-line progress, and gradual integration. We are expected to be at the forefront of the world in the near future, and launch a new generation of digital cross-border supported by the central bank’s digital currency. payment system. According to my current competitive position in this market, I believe that China is expected to occupy a favorable position in this big game of world economic finance, out of the Chinese experience and out of the Chinese model.

I expressed my basic views on Libra at the Davos Forum in Dalian in early July. This article further discusses my three observations: 1. The possible subversion of Libra; 2. The global supervision of Libra ; 3, Libra to China's opportunities.

First, Libra may be subverted by Libra

As an upgraded version of the cryptocurrency, Libra has a series of expanding functions such as cross-border payments, super/cross-sovereign currencies, securities and financial services. If it can be successfully launched and developed, it may subvert the global payment system in the short term. In the medium term, it may subvert the global monetary system and the global monetary policy system, and eventually overturn and reshape the global financial market ecology and global financial stability system in the long run.

1. Subverting traditional electronic payments

Libra is a peer-to-peer and decentralized next-generation payment system based on blockchain (union chain), rather than the bank book-style electronic payment currently used by SWIFT and Alipay. The blockchain architecture makes it naturally capable of direct cross-border payment, with high speed, low cost and high efficiency, thus solving the pain of traditional cross-border payment books, long certification time and high transaction fees.

Therefore, Libra will first challenge and subvert existing payment systems and compete directly with existing cross-border payment systems, such as SWIFT, VISA, Paypal, IBM World wide, etc. Once Libra enters the local market from a cross-border, it will also subvert the local market-based payment systems such as online banking, Alipay and WeChat payment, or block online banking, Alipay and WeChat payment, etc., with its efficiency and low cost. Technology payment companies based on the local payment market enter the global cross-border payment market.

We have seen traditional cross-border payment institutions such as SWIFT begin to deploy and R3 Alliance launches SWIFT+code, Ripple acquires MoneyGram, etc. to meet the challenge. Market competition must be very intense, and winning or losing is still unknown. But a technological revolution that replaces traditional electronic payments with blockchain-based digital cross-border payments has quietly begun.

2. Subverting the existing international monetary system

From a monetary point of view, Libra is a stable cryptocurrency. It is based on reserve assets. Its currency is based on a combination of major currencies (US dollar, euro, pound and Japanese yen), so it has the basic currency unit, trading medium, The basic characteristics of currencies such as value reserves. Because of the cross-border, it also has the characteristics of the digital version of the super-sovereign currency (or cross-sovereign currency). As a cryptocurrency, Libra will compete directly with the market's existing cryptocurrency or stable currency. IBM's World Wire in the existing stable currency market, JP Morgan Chase's JPM Coin, and Circle's USDC are all small, but do not rule out the possibility of rapid expansion. Libra will directly impact Bitcoin during its development.

Libra will subvert the existing world currency system. The international monetary system decided by the Bretton Woods system in 1944 is a gold-based gold standard. In 1971, the United States announced that the dollar was decoupled from gold, and the market was in turmoil. The Jamaica Agreement of 1972 determined the world currency system of the dollar credit standard. The US dollar credit-based dollar credit standard is inherently flawed. The value of the US dollar is affected by the domestic macroeconomic and financial policies. It lacks effective international supervision. In particular, the economic and financial stability of the emerging economies is greatly affected by the Fed's monetary policy. The instability of the dollar credit standard is an important factor in the global financial crisis since the 1970s. After the 2008 financial crisis, the world became increasingly aware of the inherent instability of the US dollar credit standard. It also proposed the structure of a diversified international monetary system, such as the structure of the US dollar, the euro and the renminbi, or a basket of currencies based on the SDR of the IMF. The idea of ​​a super-sovereign international monetary system, but progress in practice is slow.

The idea of ​​a digital currency and payment system, represented by Libra, is likely to drive the transformation of the third international monetary system. This will be a combination of online and offline, bottom-up free-flowing currencies. If Libra can be applied on a large scale, the global currency competition pattern will be divided into two parts, online and offline. The composition of Libra's basket of currencies will also affect the competitiveness of national currencies. The global status of the currency (such as the US dollar), which is included in the basket, will be strengthened, and the erosion of the currencies not included in the basket will be further marginalized. Depreciation pressure on weak currencies, the sovereign currency of some small countries may even face the possibility of disappearing.

Today, the US dollar accounts for about 40% of global settlements, while in the Libra currency basket of Libra, it gives 50% of the weight of the US dollar, which has actually strengthened the existing hegemony of the US dollar. It is also not excluded that Libra will cooperate with the US government after the operation is mature, that is, cooperate with the US Treasury and the Federal Reserve, gradually increase the proportion of the US dollar in a basket of currencies, and finally only link with the US dollar, becoming the official digital dollar issuer and operator. . Facebook CEO Zuckerberg bluntly stated at the congressional hearing that Libra needs to cooperate with the US government and is ready to wait patiently. In this way, Libra will be the new digital SWIFT in the world and the monopoly of the new digital financial ecology in the world. With the advantage of the US dollar, it will rebuild the hegemonic position of the US dollar through online and offline advantages in the digital world and the physical world. The status and energy of this new dollar hegemony will far exceed today's dollar hegemony.

3. Subvert global monetary policy and financial stability

Libra is a stable currency linked to the official currency and therefore has a systemic effect in nature. Libra may affect global monetary policy. Libra, as a tool for deposits with deposit certificates, naturally has currency creation and currency multipliers. The Libra Association may become the central bank of the digital world, which will subvert the existing global monetary and financial system. Libra may also have a boost to the spread of financial risks. If a currency in a basket of currencies is in crisis, the people holding the currency will tend to convert the local currency into Libra, which will lead to further depreciation of the currency and increase risk spread.

Libra may also increase currency fluctuations. The currency that is included in the Libra basket will be impulsively exchanged for Libra through the issuance of currency, which may lead to competitive printing. Due to the technical characteristics of bottom-up and simultaneous synchronization, the irregularity of Libra's cross-border flow will also pose challenges and impacts on current cross-border capital flows and management.

4. Subvert the existing financial ecology

Libra Libra has created an online and offline combination, user autonomy, peer-to-peer payment and self-finance mode. The whole process is generated locally from the personal private key, which is secretive. After exporting the public key and opening the account to the wallet address, there is no need for an intermediary to replace the commercial bank account system. Individuals guarantee digital identity and directly assume transaction responsibility. All customers have their own control and do not need third-party support. It is a complete self-finance model. This decentralized financial architecture based on blockchain and smart contracts will challenge and compete with the financial architecture of existing centralized accounts.

Libra naturally has the financial attributes of the bank plus capital market and can assume the financial functions of direct financing and indirect financing. Libra itself is also a kind of security, a certificate generated by the mortgage of traditional assets. Once Libra is used, it will naturally enter the market segment through cross-product sales. As long as the transaction is priced with Libra, Libra will automatically enter trade financing, consumer credit, deposit absorption, payment initiation, asset management, etc. Kind of financial business. From the financial attributes of Libra, Libra's financial business can be deposited, including deposits and loans, securities issuance, digital asset issuance, decentralized asset transactions, and activation of third-party marginal asset transactions. Thus forming an online and offline, bank, stock market, bond market and financial derivatives, almost all-encompassing new financial ecology. The Libra Libra is thus almost integrated with the central bank and commercial banks, and has the ability to directly issue currency and credit expansion.

Second, Libra's global supervision of Libra

Libra is essentially a cross-border financial institution. Libra may have an impact on global monetary policy, cross-border capital flows, and cross-border settlement of central banks. Its financial/like financial behavior scale and scope are implicit. The importance of the importance of the global financial system must be placed under global supervision. National financial regulators have the interests, responsibilities, and obligations to participate in the regulation of Libra at the outset. The world needs a collaborative/game to set Libra in a new, more comprehensive/multi-layered regulatory framework that will set a new regulatory framework for Libra and must be an international Regulatory framework. This framework needs to be recognized by both national securities regulation, fund supervision, banking supervision, the central bank and the financial stability committees of different countries under different departments, as well as international financial organizations. At the same time, national regulatory agencies must have mechanisms and capabilities to understand and intervene in the Libra technology development roadmap and rulemaking through relevant institutional arrangements.

1. Technical risk supervision

Libra Libra will first encounter technical challenges. From a technical point of view, the multi-center license chain architecture, MOVE, VST language, and improved version of the Byzantine algorithm are simplified linear logics, which improve the geometric scale expansion and energy consumption of node information. But still face code quality instability, high-speed private network and node settings as well as open and performance balance issues. Its main core competitiveness is the intelligent contract of blockchain plus independent financial model, but the current scale and efficiency of user autonomy requiring smart contract platform is still the main bottleneck. Considering the global systemic importance of Libra, Libra requires advanced knowledge of the path and nodes of Libra technology for future technological developments in advance, and requires Libra to disclose technical development blueprints and technical risks in a timely manner.

2. Operational risk supervision

Information has been disclosed indicating that Libra also has systemic operational risks. Libra involves Licensing Mechanisms between central banks that need to establish basket currencies with platforms such as central banks and the Bank for International Settlements, as well as exchange, liquidation and liquidity support for various currencies. The direct coordination mechanism of the central bank is a prerequisite for the operation of Libra. The existing Libra Association Libra Association needs to define a credit rating to support the credit rating required for the global settlement currency. Because it still relies on deposit banks and business models, Libra's centralized and decentralized architecture needs to be further ambiguous. Libra has repeatedly stressed that there is no leverage, but what if the merchants bring their own leverage? In addition, institutional arrangements for disclosure or manipulation of market dispositions on major issues are required. Institutional arrangements in the event of a run or loss are required, and institutional arrangements for currency fluctuations are required. These require the cooperation and involvement of national regulatory agencies.

3. Governance risk supervision

Libra's governance mechanism requires global regulation. The existing Trinity system, that is, the independence, responsibilities and control mechanisms of associations, operations and blockchains needs to be refined. The decision-making mechanism of 100 shareholders and one vote per capita needs to be clear. What is the meaning of decision-making in the case that the interests of the parties/nationals cannot be effectively represented? The transparency of decision-making needs to be universally consistent, especially in the case of personal failures and systemic responsibilities. Full involvement of regulation.

4. Financial function supervision

Libra's financial attributes are extensive, and Libra's future financial services may involve payments, cross-border payments, and will be subject to central bank supervision of third-party payments. As an asset, Libra will be subject to a series of supervision by securities regulators based on crowdfunding, STO, and consumer protection. Libra may involve multiple financial sectors such as loans and asset management, and will involve financial regulation in these areas.

From the perspective of the attributes of cryptocurrencies, there is a need for a license similar to the Money Service Bureau (MSB). The United States has a regulatory agency that has a stable currency, but it is not uniform. For example, Circle issued the USDC, obtained the FinCEN currency operation license from the Ministry of Finance, and also the operating licenses of the states. In August 2019, the New York Financial Services Authority approved two digital currencies, Gemini Dollar (GUSD) and Paxos Standard (PAX). However, regardless of local regulations, it must meet the strict requirements of global financial regulatory authorities for anti-money laundering (AML) and counter-terrorism financing (CTF), in line with the requirements of knowing your customers (KYC).

5. Fair market competition, consumer protection and privacy regulation

Consumer protection, privacy, fair competition, and antitrust are new requirements for large technology companies to provide financial services to regulators. The current regulatory guidelines are “same behavior, same regulation” to ensure fair competition in the market and eliminate the space for regulatory arbitrage. The characteristics of large technology companies in the field of data and platforms make them have network externalities and interwoven data analysis advantages after entering the financial industry. They can use platform scale to increase the value of the platform to users, and further increase the number of users. The increase in the number of users supports data analysis, and data analysis promotes existing businesses and attracts more users. And as the business area expands, more data will be created. This cycle continues to consolidate and strengthen its existing business, which may lead to monopolistic trends and unfair competition.

Large technology companies have created a new relationship between competition and data. Large technology companies have strong data monopoly advantages due to the mutual strengthening of massive data and platform externalities. Regulation should promote data sharing while protecting privacy. The EU approach is the data portability regulation in the General Data Protection Regulations (GDPR), which encourages large technology companies to enter the financial industry while focusing on data protection for users to own data property rights, requiring these technology companies to return data ownership to consumption. So that consumers can decide who can share and sell the data so that consumers can freely change the service provider. The other direction is to limit the use of data by large technology companies, using only the necessary data in a certain service, thus ensuring user privacy of data and reducing the possibility of abuse.

Recently, the US Federal Trade Commission (FTC) and the European Competition Commission set rules on the flow of data between Facebook and CaLibra, limiting Facebook's use of user data to gain an unfair competitive advantage. Under the premise of ensuring privacy, open rather than closed data, promote data flow under the GDPR framework. However, if the FTC and Facebook's $5 billion settlement plan can be released by the US Department of Justice, Libra will be released and possible for data privacy. Keeping data transparent under privacy, regulatory and data ownership and personal privacy protection requires the full involvement of national regulatory agencies.

6. Financial stability supervision

From the perspective of financial stability, national regulators should manage and manage the total amount of Libra's issuance and the proportion of the source of the reserve currency to prevent the impact on the global monetary system. Due to the complex reserve calculations needed to keep Libra's currency value stable, the relevant central bank or IMF is required to participate. In particular, in terms of the liquidity of assets corresponding to the Libra reserve of Libra, there is a need for a mechanism to deal with the liquidity crisis of the corresponding assets caused by the massive redemption of Libra.

7. Erosion sovereignty supervision

Libra has added an electronic level of competition to the existing sovereign currency competition. Due to the technology of electronic competition and the monopoly of scale, the phenomenon of “winners eat” is common. The basket currency can be used to increase the competitive advantage of its fiat currency through Libra's carrier, resulting in new unfair competition. As a result, the operation of Libra Libra will erode a considerable number of sovereign currencies, and in fact requires the sovereignty of some sovereign countries. Because Libra comes from the private sector, although it emphasizes that it will represent the public interest, it is still in the public interest from the perspective of private and corporate interests, unlike the statutory public interest of traditional public sector representatives. Libra Libra needs to cooperate with central banks to make institutional arrangements. This is a difficult system design. Beyond the conflict, how to seek public rights and private release under the Libra context, the public-private incentive compatibility mechanism is also a theoretical and institutional challenge, requiring institutional innovation by central banks.

Third, take advantage of the trend, seize the opportunity

The advent of Libra, Libra, actually provides China with an opportunity to openly enter the world in this field. We need to seriously study and respond to the impact, impact and opportunities of a global digital currency such as Libra. We have a considerable foundation in this field, can meet the challenges in commercial applications, and accelerate the development of the central bank's digital currency, and actively respond to the global cryptocurrency of Libra, such as Libra, foreign exchange management and domestic currency. The huge challenges that policies can bring. China needs to actively participate in digital currency R&D, regulation and global governance.

1. China’s discussion of sovereign virtual currency is ahead of the world.

China has considerable theoretical research basis and preliminary model tests on sovereign digital currency. In 2016, Zhou Xiaochuan, then Governor of the People's Bank of China, proposed the DCEP concept, namely digital currency and electronic payment, to link the new generation of payments with digital currency, which is internationally leading. He further proposed that the future digital currency can adopt the issuance system of the Hong Kong Monetary Authority, that is, each issued currency has a physical hard currency (international common currency) as collateral. Governor Zhou Xiaochuan also proposed the idea of ​​a two-tier architecture and distributed contacts for central bank issuance and commercial bank operations. These are exactly the same as the concept of Libra, which is proposed by Facebook today. The People's Bank of China also established the Central Bank's Sovereign Digital Currency Research Institute in 2016. It studied and discussed the central bank's digital currency from the legal digital currency theory system, the central bank's legal digital currency citations, the distributed bookkeeping technology and other theoretical frameworks, technical difficulties and policies. The issuance and operation, which is also internationally leading, was preceded by central banks in Sweden, Switzerland, the United Kingdom, Canada, Germany and Singapore, which were also thinking about and studying the sovereign digital currency of the central bank. Since 2016, President Zhou Xiaochuan has called on IMF, BIS, FSB and other international financial institutions to increase research on technology R&D and policy supervision of sovereign digital currencies in various international economic and financial occasions, and has also received support from these international financial institutions. And respond positively.

We will continue our leadership in central bank digital currency research and experimentation and continue to encourage and accelerate research and development of the Central Bank Digital Currency (CBCC). Give full play to China's advantages in DC/EP (Digital Currency/Electronic Payments) two-tier hybrid operation system, and increase research on future models, including centralized and distributed decentralized dual structure, system for coexistence of accounts and wallets, Research on future new models such as top-down and bottom-up combined systems that are widely involved. Accelerate the launch of CBDC/CBCC (Central Bank Digital Currency). The central bank's digital currency is a major policy challenge. In particular, it is necessary to increase the research on the macro financial stability policy after the introduction of the central bank's digital currency, including the exchange rate, scale and speed of the exchange of legal and digital currencies, and the introduction of the central bank's digital currency. The financial system provides the impact of credit and liquidity and its impact on monetary policy transmission mechanisms. Enhance China's position in the global financial market by addressing the lack of digital currency in the digital asset world.

2. China has the largest and most abundant electronic payment system in the world today.

China's UnionPay, Alipay, and WeChat payment are among the world's leading payment systems in terms of scale, technology and operational practices. For example, Alipay already has 1 billion customers in use, and is one of the largest payment systems in the world. It has withstood the test speed of every tens of thousands of floating hours during the double eleven. The general payment speed is already the US. 4 times the comparable speed of the industry. Ali's cross-border blockchain system has been operating across borders in countries such as Malaysia, Indonesia and Pakistan, and the speed of 100 nodes is also ahead of the current level in the world. We should encourage and support qualified Chinese payment/financial companies to enter this competition and create a new generation of cross-border payment/super-sovereign digital currency/new financial ecology in China like Libra, actively participating in this business. The competition for future world finance. Or first launch our digital payment/digital currency commercial payment system overseas. We need to first display the flag, occupy the position, stabilize and stabilize, and gradually develop in the competition.

Although the RMB is currently not freely convertible, we can still use a basket of currencies in five currencies of SDR as the unit of valuation for fair currency supporting cross-border payments. At the beginning, China's commercial fair currency can only be used as a token for online payment, which can effectively prevent the risk of capital outflow. China's commercial digital currency (tokens) will promote the international use of the renminbi. In the gradual development, China's commercial digital currency may also become integrated with the internationalization of the renminbi or the issuance of the central bank's digital currency, making the digital renminbi become World strong coins.

3. Actively respond to the huge challenges that Libra may bring to the international status of the RMB, foreign exchange management and domestic monetary policy.

We need to further deepen the reform, opening up, and establishment of the monetary system, make full use of our existing advantages, and make good use of the opportunities that Libra gives us to push the renminbi to the forefront of world finance. Including, first, rethink the thinking and path of RMB internationalization, and deeply consider the dimensions of the electronic world in the context of physical trade, settlement and investment. Second, accelerate the marketization process of the RMB exchange rate formation mechanism, expand the two-way floating space, and improve the "clean" degree. Third, accelerate the opening of the capital account. Fourth, speed up the process of RMB convertibility. For the RMB, it is necessary to find a position and direction for reform in the competition of the global monetary system. It must be recognized that if the renminbi is not freely convertible for a long time, it will be eroded by the digital currency such as Libra, like the weak currency. Fifth, support the fair competition rules and environment of the domestic payment market, and start from China to build a payment market regulatory policy and framework with Chinese characteristics that accommodate cross-border digital payments. Sixth, accelerate the integration of digital currency into existing capital control, financial regulation and monetary management systems, including regulatory and policy research, including data security, privacy and use of legislation and policy building.

4. To study and construct a possible regulatory framework for Libra's operation under China's capital management system, financial supervision and monetary management policies. Including domestic and foreign and RMB transactions, financial licenses and business scope, information disclosure, cross-border capital management, etc. Focus on protecting the sovereignty of legal tenders and maintaining financial stability and financial security.

5, strategic concentration of technical advantages, core technology breakthrough first layout

Technically coordinate the existing technical reserves and technological advantages of the People's Bank of China, third-party payment companies, technology companies and commercial banks, and focus on the tiered integration of blockchain technology and electronic payment technology, and the scale of blockchain intelligent contract platforms. Key technical difficulties such as breakthroughs and efficiency improvements, technical and risk difficulties from financial models, the impact of digital currencies on cross-border capital flow management frameworks, and regulatory issues of weak real names under digital currencies.

6, with "One Belt, One Road" as a promotion and application scenario

China has the world's broadest payment market and is the best R&D laboratory to implement, advance and test China's new generation of digital payment/e-money applications. The “Belt and Road” is the best and most extensive application scenario. The government can support the launch of China's commercial next-generation cross-border digital payment and commercial electronic money (token) systems in the “Belt and Road” initiative.

7. Actively participate in the global governance construction of digital currency and digital payment, and cultivate the right to speak

China will actively join the global governance of world digital currency and digital payments on the basis of accelerating its own central bank digital currency and market new generation digital payment/digital currency research and development. In the international arena, strengthen cooperation with central banks and international organizations, and build a monitoring and regulatory policy framework for Libra in advance. In the international community, CBDC research major countries such as Germany, Singapore, the United Kingdom, Canada, Switzerland and other international financial organizations on the IMF and BIS, FSB and other international financial organizations actively support international financial organizations for customer identification, data storage and transportation, cross-border payment Research and construction of regulatory frameworks and governance mechanisms for personal privacy and data security.

Conclusion

The Libra coin was born and opened the corner of the new international financial system revolution. The Libra white paper of Libra indicates the beginning of a subversion and reconstruction, and the drama is opening. We should not overestimate Libra's technology and potential 2.7 billion customers, nor underestimate the challenges and risks that Libra faces in its development and operations.

But most importantly, we should not underestimate the depth, breadth and speed of this change. Libra's white paper shows that Libra's development is a process, starting from payment, the midpoint is to reshape the international monetary system, and the end is to recreate the global financial ecosystem. This must be a process full of risks, twists and turns, and even crises. But this is also the process of self-learning and development, just like all new technologies and innovations of the past 20 years. We should not underestimate the ability of science and technology innovation to learn and develop today.

From the existing information, in order to be allowed to operate, Libra will meet the minimum regulatory requirements as much as possible in the initial stage. It will adopt a centralized structure and a stable currency value through payment, and will not seek rapid market expansion. After gaining experience in payment technology and operations, it gradually expanded and penetrated into the financial sector and expanded through the market power of the Facebook platform economy. Libra Libra can generate global impact once it is used on a large scale. China's supervision should intervene as soon as possible, plan ahead and strengthen coordination/games with countries around the world.

The most fundamental leading force in today's world economic and financial transformation is technological innovation, bottom-up large-scale consumer/public participation and globalization. These three forces are united, and the changes must be subversive, shocking, global, and they will develop rapidly. The speed must exceed people's imagination.

China can't stand by and can't help but participate in this competition. This is an important battle for China to realize the Chinese dream and for China to defend its 40 years of reform and opening up and the 70th anniversary of the founding of the People's Republic of China in economic and financial development. In this great transformation, we have a foundation. We should have the confidence to combine the top-down and bottom-up, and to get out of the Chinese experience and the Chinese model in this world and century reform.

This article is the first for Sina Finance , please indicate the source

(The author of this article: Zhu Min, Dean of the National Finance Research Institute of Tsinghua University, former vice president of the IMF)