Perspectives | Digital currency opens a new global financial track

Source: China Banking and Insurance Newspaper Network

Author: Ma Xiangdong (former Liaoning Provincial Insurance Society journal editorial director)

The era of the digital economy requires the support of digital currencies. In the development process of the digital economy, after the information Internet becomes the value Internet, digital finance needs to become a strong driving force for the digital economy. At present, many countries in the world are increasingly active in the research, development, and application of digital currencies, and want to seize the opportunity in the new round of global competition for digital currencies.

Global digital currency development

Facing the new trend of global digital currencies, the development of digital currencies in the United States is relatively slow. Although the US Treasury and the Federal Reserve have begun to focus on digital currencies, there have been no signs of positive action so far. U.S. regulators are harsh on digital currencies, mainly due to concerns about threats to the dollar.

The Bank of England started researching and experimenting with digital currencies as early as 2016. Following the advice of the Bank of England, researchers at University College London proposed and developed a prototype digital currency system, the Central Bank cryptocurrency RSCoin system. The RSCoin system includes three types of roles: central bank, commercial banks (mintettes) and end users. The central bank has full control over the generation of currency and publishes final transaction data to the entire system by generating a higher-level block. The global ledger is the final transaction. Ledger.

French Central Bank Governor Villerois said at a meeting hosted by the French Prudential Regulation Authority (ACPR) on December 4, 2019 that the French central bank will soon test the numbers due to pressure from Facebook to release the Libra white paper and some other countries Currency, and called for related projects at the end of the first quarter of 2020.

German Finance Minister Olaf Scholz, when talking about Facebook's Libra, said that one of the country's core sovereignty is the issue of currency and it will not leave it to private companies. Facing the challenges of Internet giants such as Facebook, a central bank digital currency called e-euro will be introduced. Such a payment system is beneficial to European financial centers and their integration with the world financial system. This area should not be left to China , Russia, the United States, or any private agency. German banks may soon be able to provide cryptocurrency services directly.

Sweden is already a country largely out of cash. The ratio of Swedish cash flow to its gross domestic product (GDP) has fallen from nearly 10% in 1950 to about 1.5%. Local bank branches continue to reduce cash handling operations, and ATMs are also scarce. Some stores have completely stopped accepting cash payments. In recent years, the Swedish central bank has been committed to the research of digital currency. At present, the Swedish central bank has adopted e-Krona (electronic crown) as the digital currency equivalent to the country's conventional currency, and supplemented it with cash.

Japan has always been open to cryptocurrencies, but has also been cautious about Libra and the huge potential user base behind it. The deputy governor of the Bank of Japan, Yumiya Masaka, said that if the cryptocurrency Libra is to become widespread, it must solve technical security issues and the issue of stable value as a settlement method. It also stated that it is necessary to introduce anti-money laundering measures, stabilize operations and strengthen risk management.

Promote the development of legal digital currency steadily

The design framework of the People's Bank of China's legal digital currency is a two-tier operating system of the central bank and commercial banks (or other operating agencies). It does not change the current currency placement path and system, maintains the attributes and main characteristics of cash, and also meets the requirements of portability and availability. Control the need for anonymity. The People's Bank of China's legal digital currency is combined with electronic payment instruments (digital currency and electronic payment package), and the goal is to replace a portion of M0 (that is, to replace cash in flow), not to replace the agreed currency M1 or the broad currency M2.

The People's Bank of China's legal digital currency research and development process is fast. At present, it has basically completed the top-level design, standard formulation, functional research and development, and joint debugging and testing. Continue to conduct a series of research, testing, evaluation and risk prevention, and steadily promote the introduction and application of digital forms of fiat currency. At the same time, accelerate the construction of the digital financial system, based on ensuring the sustainable development of digital finance, and step up the formulation of digital currency issuance and digital financial market supervision and other systems. Of course, the launch of the People's Bank of China's legal digital currency is a complex and large-scale systemic project that needs to consider market demand, legal compliance, and technology implementation.

The era of digital currency competition

The current era is the digital era. Digital sovereignty will form part of the comprehensive national strength of all countries. Digital sovereignty will be on an equal footing with financial sovereignty. Financial competition between countries is gradually entering the field of digital finance. Digital currency may be the new The key to competition. Whoever masters the global digital currency can largely have the influence of the global payment and currency system.

Throughout the world, the feasibility study of digital currencies supported by the European Central Bank is expected to make progress in the coming months. The ultimate goal of the European Central Bank is to promote more secure, innovative and integrated euro payments, benefiting everyone in the euro area, and Strengthen the international influence of the euro. The digital currency designed by the People's Bank of China is not only at the forefront in terms of speed, but also the most open in technology applications. The imagination space for use scenarios is very large (both online and offline, even without the Internet), it is highly likely Achieve cornering overtaking in digital currency competition.

Looking to the future, digital currency and blockchain are likely to become the supporting technology of the new generation of financial infrastructure, which will not only change the way of clearing and settlement among individuals, enterprises, and countries, and the mechanism of sovereign currency issuance, and will profoundly affect the global financial landscape.