2019 is about to end. Take a look at it. This year, there have been several major events in the history of the currency. From the beginning of 2019, JPMorgan Chase wanted to issue stablecoins, and later a series of stablecoins appeared, including Facebook's Libra and British company's Utility Settlement Coins (USC). These events have far-reaching effects, especially Facebook's Libra, although it has not yet been issued, but only published a white paper, but it has shaken the governments, central banks and many commercial banks of major countries in the world, which will permanently change the world's financial and monetary history.
On August 23, Mark Carney, Governor of the Bank of England, gave a speech in the United States, saying that the US dollar will lose its status as the world's reserve currency, and it will be replaced by a basket of digital fiat currencies. He specifically mentioned that this would be a synthetic hegemony Digital fiat currency. When he finished, the US media and financial circles, as well as the Federal Reserve, were frightened, and there was a lot of discussion about this. Most of the discussion focused on whether the US dollar is suitable as a world reserve currency, or which currency can replace the US dollar.
Before the Bank of England Governor gave a speech in the United States, the United States also thought that it was far ahead of other countries, including the United Kingdom, in digital fiat currencies. After Libra came out, when someone asked the Federal Reserve Chairman, he also believed that the market for digital tokens was very small. You can't fight the dollar, so you don't need to think about these things.
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The discussions in the United States were very modest at the time, but the discussions in the United States have become fierce in the past month or two, such as the following three articles:
Kenneth Rogoff, "The High Stackof Coming Digital Currency Wars" MoneyControl, "Who Will be the King of Digital Currency? Bets are off" Jeremy Allaire, "Three Frontsin the Global Cyrrency Wars".
The original English text is in digital currency, and literal translation is digital currency. But in Chinese, "digital currency" is often representative of digital tokens (digital currencies that evade regulation). In this article, all regulated digital currencies are referred to as digital fiat currencies, and unregulated digital currencies are all referred to as digital tokens.
The first article was written by Harvard professor Kenneth Rogoff. Although the article is short, it has a sharp point of view. Other articles are in fact extensions of Rogoff's point of view. Rogoff comes from a U.S. government think tank, and his views often represent the official views of the United States. In particular, if the US official is difficult to say, Rogoff can speak publicly.
Harvard Professor Kenneth Rogoff
Rogoff is Professor Thomas D. Cabot at Harvard University. From 2001 to 2003, Rogoff served as the chief economist of the International Monetary Fund (IMF). He and Carmen Reinhart published a 2009 book, This Time Is Different: Eight Centuries of Financial Folly, which was widely cited and displayed. This shows significant quantitative similarities between different countries before and after the severe financial crisis. Rogoff is also known for his pioneering work on exchange rates and central bank independence. He co-authored the book "Foundations of International Macroeconomics" with Maurice Obsfeld, which has become a widely used postgraduate dissertation worldwide.
Rogoff's 2016 book, The Curse of Cash, goes from standardized coins to cryptocurrencies and central bank digital fiat currencies, looking at the past, present, and future of currency. This book argues that, although much of modern macroeconomics is abstracted from the nature of money, it is in fact the core of some of the most fundamental issues in monetary policy and public finance. His monthly joint column on global economic issues is published in more than 50 countries. Rogoff is an elected member of the National Academy of Sciences, the American Academy of Arts and Sciences, and the Group of 30, and is a senior fellow of the Foreign Relations Committee. In the academic citation ranking of economists at RePEc (Research Papers in Economics), Rogoff is in the top ten.
After Rogoff published this short essay, other articles appeared in the United States, and the views were very clear, that is, the digital fiat war was about to begin. Harvard University also simulated an international event that mentioned that SWIFT is no longer valid because of the flow of digital fiat currencies in the world.
The first digital fiat currency competition in human history
After the Bank of England Governor ’s speech in the United States, American scholars studied the UK ’s progress on digital fiat currencies and came to a completely new conclusion, which is also consistent with the results and predictions we have spent a lot of time researching in the past few months. . That is to say, the new currency competition has arrived. This time is the digital fiat currency war, not the traditional fiat currency competition. This is a brand new competition, a competition that humans have not experienced before.
Let ’s take a look at the key points. The first point is that since Libra released the white paper, the world has begun to compete in digital fiat currencies, which is different from the traditional currency competition. We have been publishing analysis after June 2019. This is different from the currency competition reported in textbooks and the media. In the past one or two months, the analysis in the United States has also obtained the same result-this is the new currency competition. The American media all use "war" instead of the "competition" we usually use. The smell of gunpowder is relatively strong. We believe that if it is a real war, it may be years later. Now it's just technology competition, and the UK has started for 5 years.
The Bank of England launched the digital fiat currency project in 2015, which attracted worldwide attention at that time, and many central banks were paying attention. When we visited the Bank of England in 2016, we heard firsthand the Bank of England's vision of digital pounds. One of the important visions is that digital pounds will replace the US dollar. At that time, almost no one cared. We went back to China to discuss with many scholars and observers. Almost no one believed it. They all thought it was a joke of the Bank of England, a big dream.
In August 2019, the governor of the Bank of England actually said in front of the US Federal Reserve that he was planning to replace the US dollar with a synthetic hegemonic digital fiat currency. When Americans heard the news, they did not believe that one thing was that they couldn't see the Bank of England's vision and the Bank of England's preparation for four years, and the other was that they couldn't understand whether such technology and system could really replace the US dollar. But after all, the United States is the most innovative and leading country in the world's academia, and the country with the most talents. They soon discovered that the United Kingdom came this time, so in a recent article, they mentioned to the governor of the Bank of England The use of synthetic hegemonic digital fiat currency to replace the US dollar began to be taken seriously, thinking that the world was beginning a new type of digital fiat currency war.
Ma Yun once said that many people lose when they lose. For emerging things, the first is invisible, the second is down, the third is incomprehensible, and the fourth is too late. When I heard that when the Bank of England was preparing to replace the US dollar with digital pounds, most of them had not heard the news, which was invisible; or even if they heard it, they immediately thought it was impossible and believed that the United Kingdom did not have the strength to compete with the United States. However, the governor of the Bank of England actually chose to announce the matter directly to the world in front of the Federal Reserve, indicating that the United Kingdom was prepared this time. Although the United States still could n’t understand, but did n’t want to wait until the end was too late, so it launched a “digital fiat war” national security conference simulation experiment at Harvard.
Harvard's "Digital Fiat War" National Security Conference Simulation Experiment
In November 2019, Harvard University conducted a national security conference simulation experiment. The simulation theme was "Digital Fiat War: Simulation of National Security Crisis." This simulation brought together government veterans, professional diplomats, and scholars to dramatize a very real prospect–the rise of an encrypted digital fiat currency that would overturn the dominant position of the US dollar and effectively invalidate U.S. economic sanctions (US (Financial sanctions are currently being imposed on 12 countries). Lawrence Summers, a former US Treasury secretary and former president of Harvard University, also participated in the simulation.
This simulated national security conference is not a real conference, but only represents the views of government veterans and scholars in this regard. But the information brought by this meeting is very timely:
Digital fiat currency is related to national security, and digital fiat currency changes national policy. Digital fiat currency has been mentioned many times in the simulation, including digital RMB;
The Harvard team believes that SWIFT has lost a large part of its functionality and the United States needs other methods to implement national policy. In fact, the United States already knew in 2018 that when IBM issued stablecoins, it was said that cross-border transactions using stablecoins will not go through SWIFT;
The director of the participating MIT digital fiat project also directly pointed out that any plan to challenge the US dollar is a national security issue;
Participants believed that the United States must take the lead in this regard, otherwise it will have an impact on the US financial empire.
This time the United States took the matter seriously, unlike at the end of August, who also thought that the governor of the Bank of England had made a big joke.
White House National Security Council held at Harvard University in November 2019
In November 2019, Harvard University held a White House National Security Conference simulation to discuss the digital fiat war.
Major changes in financial system infrastructure
Another big observation is that the financial infrastructure will change completely in the future. We have published several articles in October 2019 to discuss this. This shows that whether it is Synthetic CBDC such as Libra, or Wholesale CBDC in the future, etc., a new type of financial infrastructure is required, and the UK is now leading the way in this regard.
The UK did not start research in 2019. In fact, it has been actively deployed in 2015. In 2016, the next-generation RTGS blueprint was proposed. In 2017, the blueprint was updated. Various experiments were started in 2018. At the end of 2018, an important report was released together with the Bank of Canada and the Bank of Singapore.
Three key points of the new digital fiat currency
The United States has also proposed three major digital fiat currencies and believes that this new type of digital fiat currency war has three major elements.
We can no longer say that any blockchain technology exists in China, and there is even a saying that there is no new technology in blockchain. If you look at the digital fiat currency structure of Fnality in the United Kingdom, it is not only far away from the architecture of Bitcoin and Ethereum, but also very large compared to today's large digital fiat currencies like Libra. To date, no team in China is doing similar design, development, and experimental work, and it can be said that it is far behind foreign countries in this regard. For example, China has not yet developed RTGS or CSD systems based on blockchain. The United Kingdom started in 2016, and released the next generation of RTGS blueprints based on blockchain in 2016 and 2017. Until today, countries around the world (including the United States) have not started corresponding research. In fact, this is the foundation of China's new digital finance. The world's first blockchain-based CSD has been completed abroad and is undergoing compliance processes.
The author put forward the top ten research directions of the blockchain in December 2019. Financial transactions are an important research direction. You must understand the transaction details to understand that the blockchain will greatly change the current financial system system. It can be said that banks and financial institutions The financial infrastructure used by institutions may change in the future and become a blockchain-based infrastructure. This is a century-old financial revolution that confirms that the Wall Street Journal said in January 2015 that blockchain has brought about the largest financial revolution in 500 years, and also confirmed that the Bank of England said in 2016 that block-based The chain's digital fiat currency is the biggest currency reform in 320 years.
What is reform? Using a new system is reform? No, reform is that the original technology is completely replaced afterwards, including infrastructure, such as the oil lamp used in the past, and now the electric system required by electric lamps and electric lamps is equivalent to a new type The emergence of industry is the reform. We mentioned in another article that the technological revolution brought by the blockchain is huge and that we can't see right now, so everyone should quickly roll up their sleeves and work hard to develop new blockchain technology. Stay at the forefront of theory, occupy the commanding heights of innovation, and gain new industrial advantages.
2. New Macroeconomics
Digital fiat currency must bring new industry and related knowledge, which is a new type of macroeconomics. Traditional macroeconomics cannot explain phenomena that have now occurred, such as the digital fiat currency war. The current digital fiat currency process is different from the traditional currency transaction process. The interest, exchange rate and other policies mentioned in traditional macroeconomic textbooks cannot explain the effects mentioned by Libra and the Bank of England under the new blockchain-based digital fiat environment , Indicates that traditional theories are not enough (but still exist and are useful), and new theories need to be developed.
Macroeconomics is a science that explains current market behavior. It is a discipline that observes and explains phenomena in the actual environment. Traditional macroeconomics is difficult to explain why digital fiat currencies can produce With such a big impact, textbooks don't mention these things. Recent observations by the International Monetary Fund and some of the observations we mentioned require new theoretical foundations. Foreign countries have also publicly acknowledged the emergence of new types of macroeconomics, and have successively published new views.
We have mentioned many times in the past few months that a new type of blockchain-based macroeconomics will emerge. This will not be the economics of Bitcoin. The central banks of various countries are still suppressing digital coins such as Bitcoin and Ethereum. It is now a “digital fiat competition”, not Bitcoin or other digital token competitions.
It has been mentioned in foreign think tank discussions that the use of regulation to limit the use of digital fiat currencies and its connection to the underground economy. It can be clearly seen that after the British dear gave a speech in the United States, the United States' attitude towards "synthetic hegemonic digital fiat currency to replace the US dollar" was already obvious.
Libra has inspired central banks in many advanced economies to speed up their plans to provide a broader base of retail digital fiat currencies and work to promote financial inclusion. But this war is not just about the profits of printed currencies. Ultimately, it depends on the government's ability to monitor and tax the economy, and the ability of the US government to use the globalization of the dollar to advance its international policy goals.
At this point, I wonder if you can feel the atmosphere of the international digital currency war when you read the above scene description? Whether these simulation scenarios will appear is still unknown, but it can be clearly seen that blockchain technology can affect national security and may also shake a country's position in international finance. The United States was awakened by a speech by the Bank of England governor in the United States and began to conduct research on national security levels. This is worth our serious study and treatment.
Director of Beihang Digital Society and Blockchain Lab, Chief Scientist of Tiande Technology, Head of Major Projects of Ministry of Science and Technology, Director of Blockchain Internet Lab of National Big Data (Guizhou) Comprehensive Experimental Zone, Tianmin (Qingdao) International Sandbox Research Dean, Dean of China Information Technology Blockchain Research Institute, Honorary Dean of CCID (Qingdao) Blockchain Research Institute, Chairman of China Asia Economic Development Association Blockchain Industry Professional Committee, Beihu Gold Blockchain Specialist Committee director
Doctoral candidate of Beihang Computer School, Chartered Financial Analyst (CFA), Founding Member of Beijing Financial Analyst Association