Li Lihui, Former President of Bank of China: China may become the first country in the world to launch fiat digital currency

Author: Qi Ning

Source: Finance

On December 5th, the 4th International Forum on Intelligent Finance and the 2019 "Leadership China" Annual Ceremony was held in Beijing. More than 1,000 elite scholars and hundreds of financial institutions gathered together to discuss China and the world's "Great Change, Big vision, big future. " Li Lihui, the leader of the Blockchain Research Working Group of the National Internet Finance Association and the former President of the Bank of China, attended the forum and shared their views on the "Big Future | How the Blockchain of the Peak Dialogue Affects the World" link.

Blockchain is more fully applied in the financial field

Li Lihui first briefly introduced the blockchain from a definition perspective, and then talked about the application scenarios of the blockchain. Li Lihui first mentioned the application in the transaction link. He said that he had many counterparties, many transaction links, and a long management chain. At the same time, in scenarios where the degree of ideal is relatively high, the blockchain has certain advantages. It can build a space-time-folding three-dimensional interaction architecture, which is conducive to the parallel transmission of information and the parallel crossing of control.

The second application scenario is unknown in trust. Li Lihui said that in the scenario where traditional commercial credit cannot be popularized, the blockchain can use smart contracts to express rules through algorithmic procedures to solve the problem of trust between counterparties.

Li Lihui said that the current application of blockchain in finance is quite sufficient, and experimental applications have achieved some preliminary achievements, including the application of supply chain finance, cross-border payments and some regulatory technologies.

Li Lihui also said that the application of blockchain can be a good combination of government agencies, enterprises, financial services, etc., and there is still a bright future. At the same time, there are still some bottlenecks that need to be broken in terms of large-scale applications, especially reliable applications, with the iterative innovation of technology will gradually be resolved.

5 credibility of digital trust in the era of the Internet of Everything

Speaking of the era of the Internet of Everything, where 5G and artificial intelligence technology are rapidly developing, Li Lihui quoted the predictions of relevant organizations that the scale of China's Internet links in 2019 is about 3 billion, and by 2022, it may reach 7 billion. Dramatically and even geometrically increase the speed of our IoT links.

In addition, in the Internet era, institutions, people and things are linked together. The certification of the real right relationship and the value body of digital assets requires the establishment of a digital trust system. The latter has three implementation methods. The first is to use the blockchain. Technology, the second is the use of big data mining to find credit, and the third is the use of integrated or integrated big data, artificial intelligence, blockchain technology.

Li Lihui said that the current digital trust is in the process of being established, and the scope of application is not particularly large, but based on its low-cost inclusiveness, the future application prospects are broad, and the establishment of digital trust in the future will likely achieve five possible One is trustworthy data, the second is trustworthiness of property rights, the third is trustworthiness of authorization, the fourth is trustworthiness of contracts, and the fifth is trustworthiness of legal persons.

Opportunities and challenges of digital currencies

A topic that cannot be bypassed in blockchain is digital currency.

Li Lihui said in this regard that the issue of legal digital currency may have to solve three problems. The first is to technically meet the needs of retail business in a large market with high concurrency. The second is to institutionally enable the efficient operation of the currency market. At the same time, the reliability and efficiency of the monetary policy transmission mechanism must be ensured. Third, in terms of use functions, the cost should be lower.

Li Lihui believes that only by solving the above problems, digital currency can reach the price of commercial economy scale, which is a problem that fiat currency needs to be studied. He believes that according to the current situation, China may truly become the first country in the world to launch fiat digital currencies.

Regarding another digital currency virtual currency, Li Lihui also raised two concerns: first, the virtual currency is based on a public blockchain community, and the high concurrent demand is often difficult to meet; second, there is not enough physical assets to support it There is also insufficient endorsement of trust, and speculation is relatively heavy. "For example, in 2018, when the lowest bitcoin was more than 3,000, it was 84% ​​lower than when it was high. Unless the virtual currency can solve the aforementioned technical and economic defects, it is difficult to enter the popular vision." Li Lihui said.

At the same time, Li Lihui said that in order for a general institution to issue a digital currency to truly become a trusted digital currency, it must have five aspects to enter the field of popular economic life. The first is the trust endorsement of a reliable institution, and the second is a sufficient customer scale. The third is good financial infrastructure, the fourth is sufficient auditable entity assets to support it, and finally market access is required.

"The digital currency jointly issued by some inter-agency institutions may be a major challenge to the future development of the world. First, it may become a global super-sovereign currency. Second, it may serve as a financial infrastructure, Liquidation has gradually entered the wider financial field, including financing, investment, etc. "Li Lihui reminded that" this kind of global currency development is likely to compete with existing commercial banks to a large extent and may replace commercial banks. There are some businesses now, so I think we should also pay enough attention to the possible emergence of such global super-sovereign currencies. "