Opinion | Zhongjing Jinchuang Zheng Runxiang: RMB internationalization should establish a mechanism for applying RMB digital currency in the field of commodity trading

Author: Dean of the Year by the Information Technology Research Institute Zheng Runxiang

Source: BTRAC Global Digital Network Advanced Think Tank

Editor's Note: The original title was "Strategic Proposals for RMB Internationalization in the Digital Economy Era"

With the new crown virus raging around the world, the United States began a new wave of unlimited monetary easing. In the future, the US dollar will become an indisputable fact that the world will be raging and harvesting wealth like a virus. The pace of accelerating the internationalization of the RMB cannot be delayed.

The RMB internationalization has experienced a ten-year development period since its inception in 2009, but it has stumbled so far and is not satisfactory. The world is facing a major change that has not been seen in a century. The international order is being reconstructed in depth. The Sino-US trade war and the global spread of the new crown virus have increased the uncertainty of China and global development. Facing the complicated internal and external situations, the US-led international rules led by Western countries, and the US dollar-led international monetary system, it is difficult to achieve a substantial breakthrough if the RMB internationalization path continues the previous development path. Complying with the new round of scientific and technological revolution and industrial transformation trend dominated by the new generation of information technology, digital transformation has become an inevitable choice for the development of various fields, including digital currency. The RMB digitalization strategy will open up a new situation for the internationalization of the RMB.

1. The digital currency strategy of RMB internationalization

The current fourth industrial revolution and industrial transformation is in full swing in the world, and it will have a subversive impact on all aspects of human society. Human society has entered the largest technological transformation period in history, thus entering the digital era. The digital economy is transforming the global economy from the bottom. On June 10, 2019, the United Nations released the first "World Digital Economy Report", which has taken the digital economy as the core key to the realization of the 2030 Agenda for Sustainable Development. The global digital economy is developing rapidly. The latest figures show that the digital economy has become the core driver of GDP growth in the G20 countries. China's digital economy has accounted for more than 1/3 of GDP. The major countries have adopted the development of the digital economy as their national strategy. At the just-concluded summit of the Group of 20 leaders in Osaka, Japan, General Secretary Xi Jinping further pointed out that the world economy has entered a period of transition between new and old kinetic energy. It is necessary to build an industrial structure and policy framework that adapts to future development trends through the development of the digital economy and the promotion of interconnection. , Management system, improve economic operation efficiency and resilience, and strive to achieve high-quality development.

Currency digitalization is an inevitable choice for human society to develop into a currency system in the era of the digital economy. The RMB internationalization strategy in the digital era is the RMB digital currency. At the G20 Hangzhou Summit, the People's Bank of China stated that digital technology will bring new changes to the financial system and cause inclusive changes. The Chinese financial system is facing a revolution in the digitization of the renminbi. The currency system is further evolving into a digital currency system. The introduction of sovereign digital currencies and non-sovereign digital currencies is an inevitable trend. The Libra digital currency issuance plan that Facebook just released is a sign of the international currency division of labor entering a new competition. Our country must arouse great attention. And study new coping plans. The RMB digital currency issuance plan is based on the actual situation of China's international trade development, and an innovative and feasible implementation path that integrates big data, blockchain, new Internet of Things technologies and new financial models is worthy of our reference.

According to McKinsey's calculations, from a global perspective, the application of blockchain technology in B2B cross-border payment and settlement business will reduce the cost of each transaction from about US $ 26 to US $ 15, that is, blockchain applications can help cross-border Participants in payment and settlement business transactions save about 40% of transaction costs, of which about 30% are payment network maintenance fees for intermediary banks, and 10% are compliance, error investigation, and foreign exchange exchange costs. In the future, the peer-to-peer payment method created using digital currency and blockchain technology will realize the de-intermediate currency calculation. Not only will 24-hour real-time payment, real-time payment to account, no hidden costs, but also help reduce cross-border e-commerce funds risk and Meet the needs of cross-border e-commerce for the timeliness and convenience of payment and settlement services.

RMB joined the international currency special drawing right SDR on December 1, 2015, and the weight is second only to the US dollar and the euro, but the renminbi has accounted for about 2% of international settlement so far. The fundamental reason is that the current US dollar is the dominant international currency Under the system, the RMB does not have the right to settle and set prices in international commodity transactions, and it is difficult for the RMB to achieve an international breakthrough according to the existing system. We have to find another way to follow the trend of the times and consider the digitalization of RMB internationalization.

From a global perspective, the issuance of RMB digital currency is also imperative, and central bank digital currency (CBDC) has become the direction that central banks are actively exploring. Not only the central bank of China is actively responding to digital currencies, but many central banks including the Bank of England, the Bank of Canada and the Central Bank of Sweden are conducting research on digital currencies. The IMF has also stated that it intends to launch a global digital currency-IMF Coin under the SDR mechanism. The progress of research on digital currencies by central banks in various countries varies. Among the 25 central banks, there are 7 central banks that plan to launch CBDC, 9 are under exploration, 6 have been issued, and 3 are not considered for now.

Second, the strategic path selection of RMB internationalization-the establishment of RMB digital currency application mechanism in the field of commodity trading

1. The necessity of establishing a RMB digital currency application mechanism in the field of commodity trading.

China is the world's second largest economy, the largest trading country, the first raw material and commodity purchasing country. China's commodity trading and raw material procurement account for 48.1% of the world's total, but the RMB settlement share only accounts for about 2%. The international discourse power and pricing power of the RMB are seriously unequal to the international status of China's second largest economy. The status of the largest trading country and the maturity of technology applications such as the Internet of Things, blockchain, and big data make the establishment of RMB digital transactions and settlement methods in the field of commodities have a sufficient practical foundation. The use of Internet of Things, blockchain, and big data technology to realize China ’s adoption of the RMB digital currency transaction settlement mechanism in the field of commodities, replacing US dollar settlement, will be a major breakthrough in RMB internationalization.

2. Specific implementation plan of RMB digital currency application mechanism in the field of commodity trading

Build a unified national application ecosystem of digital currency for commodity spot trade. Although China has the most complete industrial system in the world, China has a strong dependence on crude oil, mineral products and other commodities in the international market. Most of the important raw materials produced by industry cannot achieve the global allocation of RMB, and foreign exchange is required for international procurement . As a result, domestic export companies tend to charge local currency for finished product exports, and bulk import companies have to use foreign currency for foreign exchange payments, resulting in a currency mismatch between exports and imports. If China wants to follow the Grassman's rule and the renminbi has the right to speak, bargain, and set prices in the world ’s commodity trade, it is necessary to establish a centralized national commodity exchange and create a unified national digital currency commodity spot trade application. Ecosphere.

The specific implementation recommendations are as follows: actively carry out the construction of a digital currency ecosystem anchored in RMB; promote comprehensive business cooperation between domestic commodity spot exchanges and the same type of exchanges in overseas countries; design and systematically rely on Transaction Banking business Closed financial solutions, and closed in commodity spot exchanges, effectively avoid the impact of international hot money on the exchange rate of the RMB, and can improve effective supervision; encourage domestic banks to multi-site overseas layout, improve overseas service capabilities; improve the collection of commodities The degree of mining, especially the increase in the concentration of commercial stocks of national strategic reserves and national strategic stocks; enhance the integration process of spot stocks to prevent the risk of market fluctuations caused by the inconsistency of spot stocks during the period; unify the stock warehouse, futures warehouse and national reserves Library to realize the integration of three libraries. Implement national standardized electronic warehouse receipts; use the blockchain technology key distribution system to improve the standardization of warehouse receipts, which can effectively resolve financial chaos; encourage the construction of overseas diplomatic warehouses and overseas warehouses, implement national-level power confirmation and improve credibility; use overseas The delivery warehouse and overseas warehouses changed the traditional international trading habits in the process of purchasing bulk commodities, from CIF delivery to FOB delivery. Through the RMB cross-border settlement system, the current situation of vicious competition of decentralized, fragmented, and disordered procurement of bulk commodities has been changed.

The implementation of the above plan requires specific innovative institutional arrangements and supporting mechanism construction at the national level.

3. Suggestions on the construction of other supporting systems for RMB digital currency to help RMB internationalization

First, it is recommended to accelerate the legislative work of the supervision of financial institutions' token business

China has preliminarily established a framework system for legislation in the Internet field. The emergence of the Internet of Things and blockchain technology has the dual functions of information dissemination and value flow. The transformation of the industry and industry is far greater than that of the Internet, which requires higher-level legislative support. At present, most countries have incomplete regulatory legislation in this area. The core is to establish a global-oriented IoT blockchain governance system from the national level, rather than solve local problems in the country, and actively participate in the coordination of international governments and non-governmental organizations and the formulation of relevant standards. The first is the identification of the token, and the corresponding supervision is carried out according to the nature of the token; the second is to regulate the circulation of the token, set up a corresponding mechanism for the use of the token and issue the corresponding license, and supervise the token industry through the legal compliance office; 3. Supervisory sandbox, which is a manifestation of the tolerance of the regulators for innovation, so that the vitality of the token industry cannot be accidentally killed. The legislation in the field of Internet of Things and blockchain technology is not a separate legislation but a continuation of legislation in the Internet field.

Second, it is recommended to establish a unified management organization for big data in China

Continue to play the role of the coordination and leading group of the Golden Card Engineering Organization and establish a unified coordination agency. National big data management is a huge system project. Doing a good job in organization and coordination is the fundamental guarantee for its successful implementation and success. It is also an inevitable requirement for big data to become more complex, professional, and technical. The daily office is jointly formed by multiple departments, and a special organization and coordination leading organization should be established at the central and local levels to achieve unified planning, operation and supervision of China's big data system, and promote the big data and regional, department and business interfaces. Docking and service upgrade. The national management big data agency effectively supervises the information flow of the digital economy formed by market players, guiding and promoting the rapid development of the digital economy.

Third, it is recommended to establish a foreign exchange leveling fund

To ensure that the RMB is basically stable at a balanced exchange rate, in addition to continuing to improve the RMB exchange rate formation mechanism and further improving the transparency and marketization of the RMB exchange rate formation mechanism, it is recommended to establish a foreign exchange leveling fund (foreign exchange leveling account) Establish an exchange rate intervention mechanism suitable for the cross-border use of RMB to reduce exchange rate fluctuations caused by speculative actions and short-term concentrated flow of funds, so that the RMB exchange rate can fluctuate within a reasonable range, with fluctuations. When the national currency exchange rate falls below the government's exchange rate target, the central bank immediately uses the foreign exchange leveling fund to sell foreign exchange and purchase the national currency to prevent the local currency exchange rate from falling continuously; when the national currency exchange rate rises, it is higher than the government's exchange rate target At that time, the central bank dumped its national currency and stabilized the local currency exchange rate. The scale of the foreign exchange leveling fund must be adapted to the scale of the foreign exchange market in order to effectively regulate the supply and demand relationship in the foreign exchange market. The establishment of a foreign exchange leveling fund is conducive to maintaining a stable exchange rate and escorting the internationalization of the RMB.

Fourth, suggest a financial license based on IoT technology

The Internet of Things financial business is rooted in the industry and is committed to the development model of industry, finance and co-creation. It continues to make breakthroughs in the field of Internet of Things through links, reconstruction, co-creation and sharing. Cut into various physical industries with financial services, proactively look for industrial pain points and opportunities, promote the co-creation, sharing and win-win of related enterprises and the entire industrial ecosystem, and promote industrial transformation and upgrading. To build a chain-type credit ecology, a series of industry optimization and credit value-added services were carried out, and an industrial ecosystem was constructed through the expansion of Internet of Things financial services.

Fifth, it is proposed to establish China Xiong'an Commodity Exchange

China has become the largest importer and the largest buyer of commodities in the entire international trade field, and has made tremendous contributions to the global economy ’s emergence from the crisis. But the huge purchasing power has not helped Chinese companies change the embarrassing position of price recipients. Generally, commodities can be divided into four categories, namely energy commodities, basic raw materials, bulk agricultural products and precious metals. Chinese companies participating in international market transactions have little influence on transaction prices, and they can basically only passively accept the prices of international markets. Due to the origin, futures speculation market, supply-side monopoly and international politics, the actual price increase of many commodities has greatly exceeded the reasonable range reflecting the supply and demand relationship, which not only caused huge economic losses to Chinese enterprises, but also caused China ’s basic raw material prices and mid- and downstream Rising product prices have weakened the international competitiveness of Chinese products.

Relying on the long-term development of the political function of the capital and the economic function of the Xiong'an New District, we plan to establish China Xiong'an Commodity Exchange, and strategically cooperate with major banks to build a global delivery warehouse network of various raw material production, sales and distribution centers, according to national interests Demand and market demand, constantly and timely launch standard spot trading varieties that are in line with national strategic interests, but also meet the needs of domestic and international markets. Through RMB internationalization, gradually establish RMB pricing and settlement mechanisms in viable markets, win fair competition opportunities in international trade, participate in the construction of international commodity pricing mechanisms, and obtain the bargaining power and pricing power in international bulk commodities. The survival and development of China and its enterprises are crucial.

Sixth, it is recommended to establish a Hainan offshore spot gold exchange

Gold takes into account the two attributes of finance and commodities, and vigorously develops the gold market, which is conducive to giving play to the unique role of gold different from other financial assets. , Maintain financial stability and safety Take advantage of the existing gold market base in Shenzhen and Hong Kong. By establishing the Shenzhen (Qianhai) offshore spot gold trading market, the system layout of China ’s multi-level gold market will be improved and related financial product services will be extended to the entire The upstream, middle and downstream of the industrial chain help domestic and foreign gold companies to better avoid price and exchange rate risks in the international market.

As the most important currency anchor, gold's pricing mechanism has already exceeded the scope of ordinary commodity markets and has strategic significance. Hainan is the world's largest free trade port under construction in China. If China takes Hainan as a backing point and builds an offshore spot gold trading, delivery and clearing system denominated in RMB, it will bring new investment to the overseas offshore RMB market The pipeline, directly linking offshore RMB to deliverable physical gold will be an important credit blessing for RMB internationalization. The construction of a gold offshore trading center in Hainan will promote linkage and integration with Southeast Asian countries, and will further enhance the influence and pricing power of gold products denominated and settled in RMB in the international market, thereby further enhancing the RMB in the international market Gold pricing power.