Bai Shizhen: Proposal to issue encrypted digital currency "belt currency" to improve cross-border payment systems in countries along the "Belt and Road"

Author: Bai Shi Pan, Mayon treasure

Editor's note: The original title was "Looking forward to China-Singapore Financial Cooperation along the Belt and Road". The original article was published in Singapore's Lianhe Zaobao.

Singapore is an important fulcrum country along the “Belt and Road”, and China-Singapore two-way investment plays a leading role in the “Belt and Road” cooperation. In 2018, Singapore's investment in China accounted for more than 80% of the total investment in China along the “Belt and Road” countries, and Chinese investment in Singapore accounted for 22.7% of China's total investment in the countries along the “Belt and Road”. In 2017, Singapore also became the world's second largest renminbi offshore finance after Hong Kong. China-Singapore's development of the “Belt and Road” bilateral financial cooperation and financing through finance have formed a relatively mature policy and market foundation.

With the closer economic and trade relations between China and ASEAN, Singapore has played a very important role in the economic and trade cooperation between China and ASEAN in strategic partnerships, trade agreements, establishment of free trade zones, 10 + 3 mechanism, etc. Financial cooperation between China and other ASEAN countries in trade settlement, cross-border investment, currency swaps, and market supervision. Under the "Belt and Road" initiative, Singapore will rely on the status of global trade, finance, and shipping centers and a benign cooperation mechanism that is committed to regional integration and economic globalization. In the capital market, financial derivatives, venture capital, mergers and acquisitions, Asset securitization and other aspects play an important media, fulcrum, window, and pivot function in supporting financial cooperation among countries along the “Belt and Road”, especially in financial innovation cooperation between China and other ASEAN countries, advanced European and American economies Make a multilateral economic and trade cake of joint construction and sharing.

First, interconnect financial markets and carry out cross-border financing cooperation

Singapore is an important meeting point for the international financial market system. It has extensive contacts and intersections with international financial markets and markets in developing countries. On the contrary, the relatively closed financial markets and inadequate interoperability between domestic and foreign countries' financial markets are not conducive to building a broad and deep bilateral financial cooperation relationship. With the in-depth development of the “Belt and Road” capacity cooperation, companies' investment and operation activities in key regions and node cities along the “Belt and Road” have become more active, and cross-border financing needs will increase substantially. China and Singapore can conduct financial system interconnection. Interoperability and cooperation, leverage the advantages of Singapore's international securities market and offshore banking system, and provide diversified currency cross-border loans, equity financing and bond financing services for Chinese companies to carry out overseas project financing, while using Singapore as a capital hub to develop international multilateral Financing cooperation to guide more financial resources around the world to support the Belt and Road Initiative.

Second, promote wealth and risk management and support infrastructure project financing

The construction of the “Belt and Road” depends on large-scale, long-term financing support. International private capital from a wide range of sources is an important supplement to the development and construction capital of countries and regions along the route. In recent years, Singapore has not only actively committed to building a global asset and wealth management center, promoted the ASEAN capital market and the "ASEAN + 3" bond market to serve the construction of projects along the route, but also attaches great importance to its own development planning and project implementation, and urban development experience. Such as the “Asian Infrastructure Office” set up by the Singapore Enterprise Development Board and the Monetary Authority of Singapore to promote the participation of enterprises and financial institutions in the construction and financing of infrastructure in Asia. National market demand, providing local infrastructure construction solutions. Singapore is also forming a financing and risk management mechanism for infrastructure projects along the “Belt and Road”, which can promote and provide powerful assistance and support for Chinese companies' infrastructure project financing, risk identification and management solutions in the Asian region. With the acceleration of the "go global" pace of Chinese enterprises, it will provide more investment opportunities for Singapore's offshore asset management, private banking and insurance markets and institutions with strong financial strength. Both parties vigorously carry out private equity investment, venture capital, retirement Cooperation in funds and other areas will undoubtedly inject objective financial living water into the construction of countries and regions along the route, and bridge the funding gap in large-scale facility construction. Singapore ’s technology and risk management experience in supporting infrastructure construction and its cooperation with international multilateral development agencies The relationship will also provide strong support for related project construction.

Third, expand offshore financial cooperation and accelerate RMB internationalization

The offshore financial market is a key link to promote the internationalization of the renminbi, support the smooth trade of the “Belt and Road” and the financing of finance. As the world's main offshore financial center, Singapore's RMB offshore financial market has developed rapidly in the growing economic and trade exchanges between China and ASEAN countries, and has become the world's second largest RMB offshore clearing center. As the two sides further open their financial markets to each other, Singapore can provide more offshore RMB financial services to ASEAN countries and other countries along the “Belt and Road”, such as RMB-based lending or investment, trade settlement, foreign exchange gold trading, and insurance services. Financial services such as securities and securities trading, effectively increasing the proportion of RMB's “outside circulation” in the offshore market; using offshore RMB from the Singapore financial market to expand direct investment in the country, purchasing domestic securities products, and broadening the RMB return channel; relying on the Asia-Pacific exchange platform Carry out overseas RMB commodity and financial futures product development cooperation, expand the scope of application of the RMB in commodity pricing, financial transactions, international trade, clearing and settlement, accelerate the internationalization of the RMB, strengthen currency circulation between countries and regions along the route, and reduce Financial risks and transaction costs in the region promote all-round and in-depth cooperation among the countries and regions along the route.

Fourth, expand regional space for cooperation and promote coordinated regional development

China's inland is vast and the regional development is quite different. Under the “Belt and Road” framework, the central and western regions undertake industrial transfers, the construction of key urban agglomerations, and the development of border trade. They provide a wide range of opportunities for local governments to develop financial cooperation with Singapore. Projects such as Suzhou Industrial Park, Tianjin Eco-City and Chongqing Interoperability have become representatives of Sino-Singapore financial cooperation. Sichuan, Yunnan, Guangxi, Shaanxi, Guizhou, Hubei, Hunan and other central and western provinces and cities along the “Belt and Road” can also become The important space carrier of Sino-Singapore financial cooperation, as an important public platform for ASEAN countries to integrate into the "Belt and Road" development, can further leverage Singapore's advantages in wealth management, offshore foreign exchange, securities and futures, and focus on cross-border loans and overseas bond issuance. And overseas listings and mergers and acquisitions to expand Singapore's investment and financial services in key domestic regions and cities, and provide strong financial support for building a series of bridgeheads and important node cities that are prosperous, green, peaceful, and innovative.

Fifth, establish a third-party arbitration mechanism to promote cooperation and mutual trust

Countries along the “Belt and Road” not only have different economic, political, and cultural levels, but also have very different ethnic, religious, and social patterns. China and these countries cooperate in the development of the “Belt and Road” project, which will inevitably lead to disputes or contradictions. It is necessary to establish a good legal order to resolve the “Belt and Road” international disputes and disputes in an equal, just, independent, and highly transparent manner, thereby promoting The willingness and mutual trust of the partners to achieve a win-win development strategy while safeguarding the legitimate rights and interests of Chinese and foreign parties.

In recent years, Singapore has been committed to becoming an important international third-party economic, trade and investment arbitration platform. The "Xinjiapo Mediation Convention" signed by 67 countries and regions in August 2019 has further strengthened its existing advantages in international arbitration. Expanding and deepening international multilateral economic and trade cooperation plays an important role. In the event of a dispute or dispute between the partners of the “Belt and Road” project, they may consider conducting arbitration in Singapore to resolve the dispute.

Sixth, deepen cross-border financial regulatory cooperation and make good use of fintech to benefit countries along the route

China-Singapore economic and trade development under the framework of the “One Belt, One Road” initiative will deepen the existing regulatory cooperation between the two countries in the financial field and further improve risk response and risk disposal mechanisms. Promote cooperation between central regulators, regional governments and Singapore's regulatory authorities, build a comprehensive and cooperative regional financial risk early warning system, and form a multi-level, multi-regional exchange and cooperation mechanism for cross-border risk and crisis management. On the other hand, we will accelerate the regulatory cooperation of new financial formats, establish cross-border regulatory measures with reasonable regulations, adequate risk management and market flexibility, and effectively play the important role of new financial formats, including technology finance and digital finance, in the construction of the “Belt and Road” initiative. .

With the rapid development of fintech and the rise of the digital economy, Singapore has been actively promoting and building the ASEAN Smart City Network in recent years, and has gradually promoted cross-border data connectivity and the integration of the digital economy in ASEAN and other countries. Sino-Singapore financial cooperation can consider integrating digital financial services and supporting the construction and operation of the “Belt and Road” project, such as issuing encrypted digital currency “Belt Road Coin” to improve the cross-border payment systems of countries along the “Belt and Road” and build on this To broaden and deepen the use of digital financial services and provide inclusive financial services to people with insufficient funds in countries along the ASEAN or the “Belt and Road”; for example, the application of blockchain technology to design information with transparency and distributed multi-party governance The project operation system increases the trust and investment of the “Belt and Road” project participating countries in the project.

Conclusion

As the world's advanced international financial center and an important node of the Maritime Silk Road, Singapore will play a very important role in the financing of the “Belt and Road”, providing professional and international financing for economic and trade activities between countries and regions along the route. Support, clearing and settlement, and risk management services. Among them, the "going global" of Chinese enterprises, the expansion of the domestic capital market, and the expansion of Singapore enterprises' investment in China will be important areas to support the construction of the "Belt and Road" and carry out bilateral financial cooperation.

Looking ahead, with the deepening of mutual political trust between the two countries, the expansion of economic and trade exchanges, the further opening up of China's financial market, and the emergence of various development opportunities along the “Belt and Road”, China and New Zealand are interconnected in financial markets, internationalized RMB, and coordinated regional development Financial cooperation in the areas of financial supervision, digital finance, and other areas will continue to deepen and develop a new situation in which various types of cooperation are intertwined, mutually supportive, and mutually reinforcing.

About the Author:

Bai Shihuan: Visiting Professor, National University of Singapore, Dean of Li Bai School of Finance, Former Dean of Monetary Authority of Singapore

Ma Rongbao: Managing Director of CICC Capital Operation Co., Ltd.