Li Dongrong, China Mutual Gold Association: The development of digital currency cannot violate the essence of monetary activity

Source: 21st Century Business Herald

On the morning of November 23, the opening ceremony of the 16th Annual Global Conference (F20 Summit) of the International Finance Forum (IFF) was held in Guangzhou. Li Dongrong, president of the China Internet Finance Association, said: The future development of the currency cannot leave people's demand for the basic attributes of money, and its development must not violate the essential laws of monetary activities.

Li Dongrong said that the current research on digital currency that people pay more attention to is mainly in two aspects: the first is its currency issuance mechanism, and the second is the security and efficiency of currency use. Of course, digital currency can also be delimited to legal figures or private digital currency, digital tokens, etc.

For the former question, there are special academic groups and institutions at home and abroad to conduct research. The People's Bank has set up a digital currency research institute, and many experts and scholars have conducted research.

These years are an important aspect of Li Dongrong's work on the safety and efficiency of money use. "Because I am engaged in scientific and technological work in the Foreign Exchange Bureau of the People's Bank of China, improving the speed and efficiency of money circulation and ensuring its safety, and maximizing the replacement rate of cash use, we can talk about it. According to my experience in working at the central bank, In terms of people's understanding or basic requirements for money, there are four aspects: the first is the stability of the currency, which is the most important, the most important and the basic premise; the second is the safety of the use and preservation of money. How to store it in the process? Is it safe? Is the third convenient in economic transactions? It is convenient to complete economic trading activities. Fourth, it is quick to deliver. Currently, according to network and technical support, the speed of currency delivery is spike. This was unimaginable ten years ago and twenty years ago," said Li Dongrong.

From the day of the birth of its own currency, human beings continue to apply various emerging technologies and strive to improve and improve in the above four aspects. The history of human currency development is a history that is accompanied by scientific and technological progress, constantly improving and perfecting our distribution and use of money. Regardless of how technology advances, it is a means of adapting or meeting the need to use money in economic and social activities.

So when it comes to the future trend of currency development, Li Dongrong mentioned that it should be reflected in these four aspects. In fact, efforts to improve the security and efficiency of money use have never stopped. From the earliest shell currency, the stone currency, the bone currency, the metal currency to today's banknotes to coinage, from the earliest checks, money orders, promissory notes, and even today's bank cards, as well as flash payments on bank chip cards. There are also WeChat payment, Alipay and so on. Undoubtedly, it does not reflect the unremitting efforts of people to pursue the quick, safe and convenient use of money.

More than 30 years ago, at the beginning of the reform and opening up, currency circulation was a very important task of the central bank at that time. At that time, the circulation of money was mainly the cash flow or the M0 part. Whether the cash flow at that time was compatible with the commodity circulation activities. To this day, there is no major change in these essential aspects. If there is a change, it is to adapt to the circulation of M0 and commodity circulation, and gradually shift to the current narrow money M1 and broad money M2 to adapt to commodity circulation. We are doing a lot of work now, or focusing on the M0 replacement effort.

Of course, with the development of modern science, especially the development of digital technology, some new academic views have been put forward. Is the digital technology able to play a more important role or even a subversive change in the replacement of M1 or M2? From the perspective of academic research, there is no problem. Everyone can actively study, and there are hundreds of flowers and hundreds of schools. However, it is a very prudent thing to form a monetary system and apply it in real life scenarios. Any country, any government, or any central bank must be very cautious on this issue, and it is necessary to conduct a rigorous argument. And practice verification. Li Dongrong believes that the stability of the currency is always the first. Historical experience shows that if the use of digital currency brings us security, speed and convenience on the basis of currency stability, it will certainly adapt to social needs and have broad development space.

On the other hand, if it brings about the instability of the currency, or the impact on the stability of the currency, the catastrophic impact.