Babbitt Column | Li Guoquan: How to Treat Libra's Opportunity to Create Global Digital Currency

On June 18th, the world's largest online social platform album (Facebook, also known as Facebook) released the Libra white paper, which proposed to create a global digital currency, which caused great repercussions in the international financial market; at the same time; A series of encrypted digital currencies, led by Bitcoin, set off a new round of upswing. The discussion about Libracoin and encrypted electronic money temporarily occupied the main pages of most media: subversive theory, conspiracy theory, mainstream theory, crisis theory, etc., all kinds of interpretations were overwhelming, and various opinions were inconsistent.

Subversion emphasizes that the book is based on the Libra coin ecosystem with 2.7 billion users worldwide, which may subvert the existing international financial system. The centralized central banking system and the global financial governance structure of all countries will be greatly affected. It may be possible to become a global central bank, and Librae may impact the dollar's international currency status. But is the book cover capable of taking on this international responsibility? The conspiracy theory is skeptical that when the US dollar is increasingly questioned and challenged as an international currency, and the Asian countries are rapidly developing in the digital and compulsory economy, Libra coins rely on a large user base to help the United States in new numbers. Regain control of the crypto-economic sector.

Among the 2.7 billion users of the book, there are less than 200 million in the United States, and the rest are widely distributed around the world. In addition, the 28 institutions of the founders of the proposed management of the Libra Coin are mostly American institutions. The members of the organization voted, and the Fed publicly stated that there is no objection, indicating that Librae may create a pro-US global digital currency. According to mainstream theory, with the recognition and research and development of cryptocurrencies and various types of certificates by mainstream financial institutions, especially as more and more traditional investment institutions begin to deploy virtual assets, the release of Libra coins will contribute to various cryptocurrencies and Pass is gradually integrated into the mainstream financial system and has become a mainstream payment and value transfer tool. Crisis theory pays more attention to the book itself. After all, the face-to-face book has a shadow of violations of user data disclosure privacy. Moreover, the globalized encrypted digital currency will amplify the security of the network, plus the "non-central" in the future. In the course of operation, any change in the regulatory attitude of any country may “carry the whole body” and even produce a “butterfly effect”, which will bring crisis to the entire Libra community and even the international financial order.

After carefully studying the book "Librath White Paper", we found that quite a few of them are vague. Of course, at this stage, the white paper is not likely to accurately describe the ecology of Libra. As an insider, the first thing we should pay attention to is that, apart from the 28 partner organizations including the book itself published in the white paper as the founding members of the association, who are the other 72 members of the association? We boldly assume that if major institutions in various industries, some major national central banks, and even international financial institutions such as the International Monetary Fund (IMF) and other major non-governmental organizations (NGOs) can join the ecology of Libra, then Libra coins will likely become a kind of “distributed, decentralized” international financial ecosystem with a certain degree. It should be noted that what we are talking about here is “decentralization” rather than “decentralization”. So far, with the exception of Bitcoin, no virtual currency or pass has a clear vision of subverting and replacing the global financial order. When we discuss the fourth industrial revolution and the “distributed spirit,” we must simultaneously consider the realities of the international political, economic, and social development process. Different from “decentralization” and “decentralization”, “decentralization” can be gradually emerged from the existing centralized global governance structure, rather than subversive or revolutionary. Understanding this concept is crucial to our understanding of the economic and social impact of Libra.

Although “complete decentralization and distributed architecture” can be the highest concept of the economic and social governance paradigm (Paradigm) brought about by the fourth industrial revolution, the reality is that it cannot be done in one step. However, whether it is Bitcoin, Ethereum, or Libra, which ecology can take a step ahead in this development process, who can go faster, be more stable, comply with laws and regulations, and not cause a crisis, gain government and society. Trust, which can reduce the cost of transaction and trust, can be inclusive and inclusive in the true sense. This kind of ecology can gradually emerge from the existing “centralized global governance structure” driven by technology and social development. And developed, in a very long period of the future, it will only be an effective complement to the existing system, while playing an active role.

Based on the above concepts and with a positive attitude, we feel that Libra coins have brought a rare opportunity for the world to replace sovereign currencies such as the US dollar as an international currency. After the global financial crisis broke out, in the study of super-sovereign currency, there were people who reformed the International Monetary Fund's Special Drawing Rights (SDR) to enable it to become a super-sovereign world currency for research or exploration to supplement the current international currency. There are inherent flaws in the system, but for various reasons, especially in the case that it is difficult to obtain vested interests such as the United States and the United Kingdom, there is basically no practical progress. Now with such a global monetary program based on a broad user base and managed jointly by the association (rather than a single central bank), we may wish to set the most ideal goal – a global multinational central bank, international financial governance organization Economic organizations, enterprises, non-governmental organizations and even academics work together to build a super-sovereign, truly "distributed, non-centralized" international currency that provides fairness and stability for the global economy and international trade and investment. Payment and value delivery services.

Of course, when we work towards this most ideal goal, we don't have any illusions. After repeated realistic considerations and experiments, especially the game between the interests of big countries, the final consensus result will have a certain or even distance from the most ideal goal. But at least it is also likely to be much better than the sovereign currency controlled by a central bank as an international currency. We even think that the vacancy of 72 members of the Librae White Paper and the ambiguity of some of the content may be the best way to make a face-to-face book, so as to invite stakeholders to brainstorm and build a balance coin to increase it as The legitimacy of international currency.

This will be a long process. “The road is long and the road is long.” For Singapore, there is no need to worry about the impact and subversion of “decentralization”. Singapore should actively take advantage of the accumulated regulatory innovations, actively participate, and promote non-governmental organizations, central banks and major financial institutions to actively participate in this ecology. Singapore's regulatory and development experience in this area is a very convincing case for many countries. It is precisely because Singapore has a small country and a small population. The various types of cryptocurrency and escrow ecology in Singapore's exhibition industry are almost always an internationalized ecology. Under the open innovation, active and steady supervision, these ecosystems are not The impact on Singapore's financial system and order has played a role in promoting the transformation and development of the financial industry. Therefore, Singapore has the qualifications to actively participate in the construction of the Libra coin and strive for reasonable interests for small countries.

We should also clearly see that although the Libracoin ecosystem can be said to be the most promising international payment and value transfer project, we should not ignore and exclude other professional community virtual ecosystems with special goals and specific missions. In the future of the encryption and certification economy, it is very likely that industry-based, global-wide professional certification projects will emerge, such as: mobile communication currency, e-commerce platform currency, logistics and supply chain coins, and even shipping population. Different types of cryptocurrencies or the economic form and ecology of the pass, in the virtual world, are like international trade agreements in various industries. If it becomes a reality, it will greatly shorten and reduce the negotiation time and cost of international agreements in the global trade and commerce, and greatly promote the development of international trade. For the global economy, we can still maintain multi-polarity and diversity, be more equal, transparent, democratic, self-disciplined, and better promote international trade and development. At the same time, any project and ecology must have solid privacy protection and network security, transparent and stable distributed governance institutions, and open source and open to other exchanges.

At present, most countries are still more concerned about the stability of their domestic financial systems. Due to their historical burdens and various development policy reasons, industry regulation, especially for the emerging encryption and certification economy, may be too harsh. It is. For example, due to the consideration of capital project control, China has already issued a ban on the first token issue (ICO) in the early days, and does not want the development of encrypted digital currency to bring uncertainty to the internationalization of the RMB under the “Belt and Road” initiative. Possible reasons such as impact, but lack of enthusiasm for the development of global digital currency. However, with the huge impact of the current "Libra White Paper", many countries are likely to adjust their policies in the short term in order to take the lead and protect their own interests. Although both Alipay and Tencent WeChat have an ecosystem of nearly one billion users, their users are highly coincident and far less international than Facebook users. On the other hand, China's great success in the areas of third-party payment, Internet finance, e-commerce, virtual banking, financial technology, artificial intelligence and cloud computing is completely unattainable in today's book. Face book credits and face book payments that have been launched in the book have not been successful. To date, the book “Payment and Other Services” has less than 2% of the book. It can be said that if the policy adjustments are in place, the Chinese central bank and enterprises will join the Libracoin, which will improve the Libracoin as an international digital currency and strive for a reasonable international digital currency voice for China. Of course, China may also start to compete with Libra for another stove, and each has its own advantages in terms of competitive advantage. On the one hand, we feel that this will divide the international monetary system, which is not conducive to the development of the global economy and international trade and investment. On the other hand, we believe that in the short run, as technology is not yet fully mature, maintaining diversified experimentation and exploration of international digital currencies seems to be a realistic and desirable option.

In any case, Singapore's development in financial governance and financial technology, as well as close and close cooperation with Chinese technology companies such as Ali and Tencent, will enable Singapore to make a certain contribution to the development of international digital currency ecology.

This article first appeared in the South China Morning Post.

Author: Lee Kwok Kuen Singapore's financial and technical block chain professor visiting professor at the National University of white persons Pan Yue new Social Science University (former president of the Monetary Authority of Singapore Institute) Yan Li Nanyang Technological University Business School Senior Lecturer and Director of Executive Education Chinese