On February 15, according to the Blockchain media The Block, the Libra Association is considering giving up the anchoring of a package of fiat currency plans and using a currency model supported by the US dollar, that is, the US dollar as a single currency anchored by Libra. This new model is believed to help ease US regulators and legislatures' concerns and doubts about the Libra plan. In this regard, the author made a relevant interpretation, let's take a look!
Interpretation 1: Countries are actively researching and developing central bank digital currencies, and the hegemony of the US dollar may be threatened. The United States may continue to maintain the US dollar's dominant position in global trade with the help of Libra, a single anchored dollar.
Earlier, we mentioned in an article that Li Lihui, the former president of the Bank of China, said at a seminar on "the future of digital currencies" that he must be alert to the conditional approval of the Libra issue by the United States. That does not rule out that when Libra chooses to peg the US dollar as a single currency to be anchored, the United States will relax supervision and even accelerate the issue of Libra. Why do you say that?
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As we all know, asset digitization is the future trend, and currency digitization has set off a wave of reforms worldwide. China's DCEP is ready, France is actively conducting digital currency pilot work, and central banks in other European countries and Japan, South Korea, Singapore and other countries have also been actively engaged in research and development. On February 14, the Bahamas Central Bank revealed that it will be released in 2020 The digital currency was launched in half a year.
Having said that, we have to emphasize the advantages of digital currency again, that is, low cost, convenient payment, fast transaction speed, easy regulation and control, and good circulation performance. Many officials in the United States last year claimed that they did not consider issuing digital currencies in recent years, but as the situation and trends continue to change, more and more countries have begun to actively develop digital currencies.
Once countries successfully issue their own digital currencies, this will have considerable potential threats and impacts on the US dollar that has maintained its “dominant” status in international trade for many years, especially countries with an increasing international status and international influence. For example, China, its central bank digital currency, DCEP, is frequently moving, and the United States has to worry about the issue of its dominant position being blocked and consider issuing digital currencies of its own country.
Just two days ago, Federal Reserve Board member Judy Shelton, nominated by U.S. President Trump, told lawmakers that digitizing the U.S. dollar could help keep the dollar's dominance in global trade, she said:
"Competing nations are working very hard to find alternatives to the U.S. dollar. I think it is important for us to stay ahead of the times and ensure that the U.S. dollar continues to be the best currency in the world."
However, we know that the Fed has only recently begun to discuss the feasibility of issuing digital currencies. A series of issues related to digital payments and digital currency policies and regulations have just begun to be discussed and studied. Cleveland Federal Reserve Chairman Meister also said that there are advantages and disadvantages of central bank digital currencies, and they still need to study many aspects before issuing central bank digital currencies.
Therefore, for Libra, which has been planning for a long time, and whose technology is relatively mature and advanced, if it chooses to anchor the US dollar as a single currency, it will not prevent the United States from treating Libra as a digital dollar alternative and conditionally approving the Libra issue. Jason Qiao, a former director of JP Morgan Chase Bank, also stated in an interview with "Belt and Push" that Libra's anchoring of the US dollar would strengthen US dollar hegemony, he said:
"2.7 billion users can carry out international fund circulation and exchange through Libra, and Libra, as a stable currency supported by the US dollar, has 1 US dollar against 1 Libra and has its own set of clearing systems."
Interpretation 2: The United States lags behind in digital currency and blockchain technology, and reaching a consensus on cooperation with Libra may help it maintain its leading edge.
It must be said that in the field of digital currency and blockchain, the United States may have been slower than some other countries.
In terms of digital currencies, China, France and other countries have launched trials on digital currencies. At the same time, Venezuela has issued digital currencies, and the Bahamas has also stated that it will issue digital currencies in the second half of 2020. Until now, the United States and the Federal Reserve are still discussing and researching on whether to issue digital dollars and the feasibility of the central bank's digital currency issuance.
On the blockchain side, a recent study by Nikkei Shimbun on patent data in 10 categories including artificial intelligence, blockchain, and drones revealed that China and the United States are competing for world technology supremacy ten years later. Judging from the number of applications, China has led the United States in 9 out of 10 categories. Among them, blockchain has performed well, and technology giants Baidu and Alibaba Group have proven to be the main innovators.
Timothy Furey, CEO of Brooklyn-based blockchain company ConsenSys Digital Securities, also wrote recently: "Many countries have adopted innovative legislative reforms, such as flexible tax policies, which have paved the way for blockchain adoption. Real risks. The United States could lag behind these more mature international players, endangering our economic competitiveness and national security. "
Even Federal Reserve Board member Judy Shelton, nominated by U.S. President Trump, said at a Senate confirmation hearing on Thursday that the United States needs financial technology innovation to stay ahead of other countries.
In this regard, Facebook and its Libra plan have certain absolute advantages. First of all, Libra used the alliance chain in the early stage, and its white paper pointed out that it will gradually develop in the direction of public chain in the future. Because at present, to really launch the application, only the alliance chain is the most suitable. The blockchain consensus algorithm, consensus protocol, development language, and performance are also quite mature. The relevant descriptions have also been officially disclosed in the technical part of the Libra white paper. You can also refer to the previous article 52cbdc "Libra" "Blockchain : The Killer of libra" .
At the same time, the launch of the Libra project has aroused the enthusiasm of central banks and major companies in the world for digital currencies. Why? Because Libra is a global digital currency with "super-sovereign" and "super-bank" characteristics, once Libra is successfully issued, it will have a disruptive innovation in the world financial system, and a blow to commercial banks and countries with weak sovereign currencies It could even be devastating. Therefore, reaching a consensus on cooperation with Libra, which anchors the US dollar as a single currency, may help the United States to advance in digital currency and blockchain technology, so as to ensure that it can still take the initiative and dominance in this area.
Whether Libra can be successfully released in the end, or in what form and manner, and what kind of impact it will have on the entire world if the release is successful, I believe that time will give us the best answer. However, from the perspective of the evolution of the world's currency development, at least Libra has sounded the alarm bells for central banks around the world and triggered the digital currency boom, which is of great significance to the innovation and progress of the entire financial system!