Dialogue with Zhu Ning: Digital currency is an inevitable trend

On January 24, local time in Davos, Sina Finance and Economics spoke at the annual meeting of the World Economic Forum in 2020 with Zhu Ning, deputy dean and professor of finance at Shanghai Jiao Tong University's Shanghai Advanced Institute of Finance. Speaking of digital currencies, Zhu Ning believes that digital currencies are the future of the development of the entire global monetary system in the future, and will also help accelerate the internationalization of the RMB. Specifically for Libra and the DCEP piloted by the People's Bank of China, in Zhu Ning's opinion, comparing them from the perspective of corporate credit and sovereign government credit, the two are not at the same level. At the same time, as central banks of various governments pay more attention to and supervision of cryptocurrencies, the development space of cryptocurrencies such as Libra will be limited.

Sina Finance: Some opinions now mention that digital currencies will bring some help to the internationalization of the RMB, allowing it to accelerate this progress. In addition, we also noticed that in terms of digital currencies, now Facebook has proposed the concept of Libra, and the central bank has also proposed DCEP. I would like to hear how you think of the impact of digital currencies on the internationalization of RMB, and how do you see the prospects of digital currencies with two different technological paths now?

Zhu Ning: Yes, first of all, I think digital currency is the future of the development of the entire global monetary system. I think this is an inevitable trend and a long-term immutable trend. This is the entire technological progress and the reshaping of the global financial system. This is a very important breakthrough point or an entry point for the combination of points.

Secondly, I feel that from the perspective of digital currencies, I have always wanted to emphasize that digital currencies have not changed the essence of traditional fiat currencies, but have only changed the way of traditional fiat currencies' payment and settlement. Therefore, in a certain sense, it has not subverted the current global financial system, it has only increased its efficiency or changed its operating methods and scenarios.

Then on this basis, we will see that the use of digital currencies dominated by the People's Bank of China will further increase the acceptance and use of the renminbi internationally, and will definitely promote the reform of the internationalization of the renminbi on the margins. But we still have to go back to the most core (problem). We must think that the digital currency of RMB is more the way of using RMB without changing the nature of RMB. And how to increase the global influence of the renminbi, or until one day the renminbi can replace the US dollar, depends more on the intrinsic value and intrinsic nature of the renminbi.

Therefore, I think (digital currency) can help the internationalization of the RMB or the RMB become a more important international currency, but I don't think this is a subversive or decisive factor.

Then back to the digital currency represented by Libra, which is issued by the company's credit or the company's credit, and the digital currency issued by the central bank, I personally think that there is almost no suspense, I think a certain trend This digital currency will be issued by the central bank (mainly). I think there are three important reasons for this:

First, the Central Bank, as the user and the final lender of the last note-issuing power, has the responsibility of financial stability for the entire society. Since it has this responsibility, it must have some ability to monitor or control the currency. In fact, an enterprise can only issue currency or use currency. It does not have the final responsibility as a lender, nor does it have this resource. So, in this sense, I don't think the two are comparable;

The second point we must see is that no matter how developed, the corporate credit of an enterprise and the credit of a sovereign government, especially an important country, are not on the same level. Therefore, in terms of credibility, the digital currency that may be issued by the central bank is still very credible and attractive;

Third, more in developing countries, the government's ability and its resources are still very, very strong. Some time ago, everyone did not have particularly strong supervision of Libra or cryptocurrencies because the scale of this financial innovation was not large enough to worry the central bank. But whether for anti-money laundering reasons, for better understanding of your customers' financial security reasons, or for reasons of monetary policy implementation, I think the central bank is now in fact for both Libra and crypto This influence of currency is paying more and more attention to possible disturbances in the existing financial system. With this increased attention and supervision, I think that the space for the development of this kind of Libra or cryptocurrency will be restricted accordingly.

Article source: Sina Finance