Interview with Chen Weigang: Banking Regulatory Commission strictly forbids banks from providing payment channels for speculation

Source: Beijing News

Reporter: Zhang Yanxin

With the rise of the blockchain to the national strategy, financial institutions have begun to increase their investment in the blockchain field. At the same time, supervision is also tightening. In addition to the central bank's risk warning, the Non-Joint Office of the China Banking Regulatory Commission recently reminded to prevent illegal fundraising in the name of "virtual currency" and "blockchain." In this process, where is the regulatory focus of the CBRC? What role will commercial banks play as the middle tier for DCEP operation?

Chen Weigang, former vice president of the CBRC Party School and director-general supervisor of the board of supervisors of the State-owned Financial Institutions of the China Banking Regulatory Commission, told the Beijing News reporter that the blockchain can solve the problem of opacity in wealth management, trust, and fund returns. Strict supervision of banks, insurance institutions, such as investment direction, cash management, and cash payment channels. At the same time, the closeness of currency circulation and banks decreased after DCEP was introduced, and competition among commercial banks became more intense.

The funds obtained from the management of speculative coins such as the strengthening of capital investment shall not be transferred to bank accounts.

Beijing News: The Non-Joint Office of the Banking and Insurance Regulatory Commission recently prompted to prevent illegal fundraising in the name of "virtual currency" and "blockchain." Where is the regulatory focus of the CBRC?

Chen Weigang: The regulator must first protect the interests of consumers. There are three parts of the business that are prohibited. The first is to prohibit banks from direct or indirect flow of funds to false, illegal blockchain investment targets. The investment company controlled by the bank is required to fully understand the technology of the invested company before investing, whether it is maliciously speculating on the concept of blockchain, and whether it is engaged in illegal business such as ICO.

Second, banks cannot provide payment, transfer channels, and transaction accounts for illegal fundraising projects in the name of "virtual currency" and "blockchain." The most direct is that funds obtained from speculation cannot be transferred to bank accounts.

Third, banks' own fintech innovations must also prevent false blockchain hype. Banks can apply blockchain technology, but before applying, they must fully evaluate whether the technology is in line with business logic, whether the company has sufficient qualifications, and whether it has reached the level of risk control it should have to ensure that consumer rights and interests are protected.

Beijing News: The Ministry of Industry and Information Technology recently stated that it will work with the CBRC and other relevant departments to promote the organic combination of new retail, blockchain and the Industrial Internet. What role will the bancassurance institutions play?

Chen Weigang: The CBRC has been actively guiding and supporting financial institutions to serve the real economy and small and medium-sized enterprises, as well as inclusive finance. Using blockchain technology to carry out practical applications in the fields of bank receivables, bills, and supply chains can improve the fairness and transparency of transactions, effectively prevent black-box operations, and increase the trust of all parties to the transaction. Taking new retail as an example, blockchain can be used to implement product origin tracing, product quality tracing, producer tracing, and logistics tracing. In the payment process upstream and downstream of the supply chain, using blockchain smart contracts, banks can realize payment. Automatic transfers not only improve transaction efficiency, but also prevent the formation of triangle bonds in the supply chain.

Applied to bank loans to small and micro enterprises, blockchain can play a more magical role. Banks' lending to small and micro enterprises is most afraid of information asymmetry. Banks and insurance companies do not understand the true situation of the enterprise, so that banks are afraid to lend and insurance companies are afraid to guarantee. After applying the blockchain, all affiliated companies, banks and insurance companies are on the same chain. Every move of the company is reflected on the chain. Corporate debt, production, sales, product quality feedback, turnover, net profit, etc. At a glance, insurance companies and banks have sufficient understanding of the company's situation and have the confidence to serve the company. Once the risk occurs, they can stop the loss in time. Therefore, at that time, the problems of good small and micro enterprises' difficult payment and expensive loans will not exist. However, the days of poor small and micro enterprises will be more difficult, which can also play a role in the survival of the fittest.

Beijing News: It takes a lot of investment to develop a blockchain system. What about smaller banks and insurance institutions?

Chen Weigang: At present, the leading banks in blockchain technology are still big banks. After all, they have stronger financial strength, more talents, and wider application scenarios, such as the scale of industry, agriculture, China, construction, transportation, and recruitment. Larger banks and small and medium-sized banks also do better. As far as I know, Zhejiang Commercial Bank applies blockchain technology to carry out supply chain receivables financing.

I think that the development of blockchain in the future will reach a certain level, there will be standardized and standardized products, that is, open source software, small and medium banks apply open source software to achieve the popularization of blockchain technology, that is, like using windons software, small and medium banks do not have Need to develop a system yourself.

After DCEP landing, businesses are more free to choose deposit banks, which will intensify competition among commercial banks

Beijing News: What role will commercial banks play in the DCEP implementation?

Chen Weigang : In fact, the issuance of DCEP by the central bank is similar to the process by which the central bank now issues paper money. After the banknote printing factory printed the banknotes, how did the money get into everyone's hands? Taking wages as an example, the unit will open an account with a commercial bank, and the central bank's money will be given to individuals through the commercial bank. For example, after the unit pays us wages, we will receive a series of numbers. These numbers are real currency and digital banknotes. Unlike the memory cards that currently exist in banks, the money in the memory card is actually in the bank. When people go to the store for shopping, they pay the store with the money. In fact, the personal account bank pays the store's account bank, which is a bank-to-bank transfer.

The difference between DCEP is that our wages are no longer put in commercial banks, but in people's digital wallets. This central bank's digital wallet is equivalent to the original bank card. When shopping at the store, people do not need to have a relationship with the bank. The digital wallet in the hands of the buyer can directly transfer money to the merchant's digital wallet, which realizes the point-to-point transfer of currency. The merchant's digital wallet receives real currency. These currencies need to be deposited in the bank to generate interest. Since the circulation of currency is not so closely linked to the bank, the bank that the merchant chooses to deposit is more free. Maybe competition will be more intense.

Beijing News: What impact will commercial banks have on the issuance of the DCEP?

Chen Weigang : After running DCEP, the operating system of commercial banks will become more complicated, that is, a new DCEP system will be added under the original system. The most intuitive thing is that each merchant needs to add a new device for receiving e-wallet money. This is a device system that can pay and receive offline, and directly perform point-to-point operations with customers.

Beijing News: Is DCEP more secure or less secure for ordinary people?

Chen Weigang: Any new thing has two sides, but from the perspective of development, it must be getting better and better. In terms of security, it is generally higher. Because the e-wallet can have more forms of security than bank cards, in addition to passwords, it can have fingerprints, face brushing, iris, voice and other biological identification technologies, which can better judge whether it is used by itself. Even if the password is lost and the password is cracked, the thief can be found because the money in the electronic wallet has a number. When you report the loss of your wallet, the money in your wallet is locked and you will find it when you use it again. Therefore, the anti-theft function is better.

Blockchain can solve the problem of opacity in wealth management, trust, and fund returns

Beijing News: What opportunities will blockchain technology bring to the banking industry?

Chen Weigang: The most directly beneficial industry brought by blockchain technology is the bank, because it can improve the bank's risk control capabilities. The core value of the blockchain is to establish a better trust mechanism, and the bank itself is the place where integrity is most emphasized. Therefore, people dare to give money to bank deposits or financial investment, which is itself trust in the bank. However, due to the asymmetry of information, some financial institutions have shown dishonest behaviors, such as trust and financial management. Some financial institutions did not inform consumers of the actual income, and in the case of higher actual income, they lied about the lower income or simply The product lost money. This situation also exists in funds and trust products sold by banks. Under the current conditions, consumers can hardly check the accounts even if they have doubts, but by synchronizing the relevant data of asset management products to the blockchain, consumers can be clear. Seeing where every money goes, there is no question of fraud. Therefore, blockchain technology protects financial consumers and investors.

In view of the privacy leakage concerns of consumers, in fact, the privacy mechanism of the blockchain can be defined independently, just like your WeChat circle of friends can set open permissions. For example, personal information in a bank can be set to multiple levels, such as the national security department, public security, disciplinary inspection and supervision departments, etc., and the most comprehensive information can be found. There is no need to open as many permissions to ordinary enterprises or individuals You can see the information related to your transaction during the transaction.

Another landing scenario is supply chain finance. Through blockchain technology, all upstream and downstream enterprises can conduct honest transactions through smart contracts. For example, through the blockchain, white bars can be turned into RMB. In the blockchain environment, IOUs are passed through smart contracts. When the conditions set by the IOUs are met, the blockchain will automatically honor the contract. This white bar has the same value as RMB. In the supply chain, there is a procedure for automatic transfer of borrowers and lenders under certain conditions, so there will be no malicious escape of debt.

In addition, the scenarios that can be implemented include authenticating bills on the blockchain, preventing bill fraud and fraud, and even using the blockchain for international settlement to improve the efficiency of international trade transfers.

Beijing News: What other businesses in the banking and insurance fields have the potential to be enabled by blockchain technology, but have not yet been implemented?

Chen Weigang: Insurance can also use blockchain, such as delay insurance for aircraft. At present, in many cases, insurance companies will use various excuses to not pay compensation, but in fact this is unreasonable, contrary to the original intention of setting up delay insurance. By using the blockchain, you can ensure that the system automatically claims compensation under certain circumstances, such as the absolute time of an aircraft delay, without the need for the insurance company to agree.

But the implementation of such technologies is difficult. In the past, banks and insurances were centralized operations. Institutions were strong parties and consumers were weak parties. Through blockchain, decentralization was realized, and consumers' voices were enhanced. For banks and insurance institutions, rights Will be greatly weakened. Therefore, it is difficult to promote such products, and the regulatory level can only encourage institutional promotion, and does not force them to use it.

Beijing News: What are the trends in the application of blockchain in the financial field?

Chen Weigang: I think there are ten major trends in blockchain now: 1. Blockchain industry applications are accelerating, from digital currency to non-financial fields; 2. Enterprise applications are the main battlefield of blockchain, alliance chains and private chains It will become the mainstream direction; 3. Diversified technical solutions will be spawned to continuously optimize the performance of the blockchain; 4. The combination of blockchain and cloud computing will become closer and closer; 5. Blockchain security issues are increasingly prominent, Security protection requires global consideration of technology and management; 6. Increased cross-chain demand for blockchain, and the importance of multi-connectivity; 7. Blockchain competition is becoming increasingly fierce, and patent competition has become an important area of ​​competition; 8. Blockchain investment continues Hot, the accumulated risk of the token crowdfunding model deserves serious attention; 9. The conditions for blockchain technology to be used for supervision are becoming more and more mature; 10. The importance of standardization, standardization, and open source of blockchain is becoming increasingly prominent.

Beijing News Editor Chen Li proofreads Zhang Yanjun