On June 18th, just as China’s e-commerce companies were busy with the “big promotion” in the middle of the year, Libra’s official website, the cryptocurrency led by US social media giant Facebook, was officially launched, and the Libra White Paper was released. It is planned to be launched in 2020. The cryptocurrency Libra. When the news came out, it shocked the world. Lang Xianping, Ma Huateng, Wang Xiaochuan and other well-known big names expressed their opinions.
The white paper mentions: Libra's goal is to be a stable digital cryptocurrency with the mission of building a simple, borderless currency and financial infrastructure that serves billions of people. From the white paper, Libra's main use is to pay, in addition to the use of currency exchange, stored value, trading and other scenarios, Libra plans to establish a digital economy consisting of 100 cooperative alliance nodes. At present, Visa, Mastercard, Uber, Paypal and other companies have signed up to confirm the founding node – supported by the global payment giant, is a huge breakthrough for Libra compared to Bitcoin. At this point, Facebook's ambition to be a global digital currency bank has been completely exposed.
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The emergence of Libra rekindled interest in digital currencies, and investors quickly pushed up the price of Bitcoin. On the morning of June 27, bitcoin prices were close to $14,000, setting a new high for the year. So why does Libra bring such a big impact to the world? How is it different from other virtual currencies? How will Libra affect the Chinese economy? To this end, this issue of "Management 100" interviewed the Deputy Director of the Modern Finance Research Center of Shanghai University of Finance and Economics.
Why does Libra cause global panic?
Facebook's release of the cryptocurrency Libra has caused widespread concern around the world. In your opinion, why is it so big?
Jun Jun: Mainly because Libra, which Facebook wants to issue, is more complicated than the previous virtual currency. The future may have a wider impact on the world. Plus, this is an international influence by Facebook. The Internet companies are leading, so the impact is huge and normal.
The reason Libra is more involved, because Facebook gives Libra new features. First, its currency value is linked to the value of some relatively stable financial assets. In the past, other virtual currencies did not have such characteristics. Relatively speaking, Libra's currency value is more stable and reliable.
Another feature is that Libra can be freely exchanged with national currencies, so Libra has established close ties with sovereign currencies issued by countries.
It is widely believed that if the Libra project is successful, it could become a super “international currency”. It may replace the current major international currencies, such as the US dollar, the euro, the pound, the yen, and so on. Facebook's Libra plan is extremely ambitious, so the impact is enormous.
Libra's vision is more radical than other virtual currencies
Is there any significant difference between Libra and ordinary virtual currency, such as QQ currency and Bitcoin?
奚君羊: The difference is great. First, the value of Bitcoin and Ethereum is entirely determined by the supply and demand relationship in the market. Libra's value, according to Facebook's vision, is a relatively stable financial asset, such as: linked to US national debt, so its value is more stable than other virtual currencies.
Second, it will establish a certain exchange relationship with other currencies. Ethereum, QQ currency, and bitcoin are different. Bitcoin is exchanged through mutual trading transactions. You have to use other currencies, you need to sell it to other currencies, you have to use bitcoin, and you have to buy it in other currencies. Because Libra is relatively stable in value, it is not subject to price fluctuations due to the relationship between supply and demand, and the price relationship with other currencies is relatively stable. In other words, it is measured by valuable criteria, unlike other virtual currencies that have no value base at all.
Finally, Libra can be used internationally. According to Facebook's vision, various trading activities can be completed with Libra in the future, such as: purchasing goods, services, etc., and now the use of other virtual currencies is relatively limited, and can only be used in some trading activities on the Internet, covering The crowd is limited. If Libra conceives it, it will equal the current sovereign currency in the monetary function. Its ultimate goal is to truly become a currency widely used internationally. Libra wants to be more radical than other virtual currencies.
What is the main reason for the siege of Libra in various countries?
At present, basically, the regulatory agencies in various countries are besieging Libra, and there are related news almost every day. How do you see such a phenomenon?
奚君羊: The main reason, first, Libra, if widely implemented, may replace sovereign currency, thus causing the loss of the role of national currency issuers, which is tantamount to depriving the government of its rights.
Second, the number of sovereign currency issued by each country is determined by the central banks of each country. Then the central bank can complete the functions of macroeconomic management through monetary policy. If sovereign currency is replaced by Libra, the macroeconomic management functions of countries cannot be realized.
For example, after the US subprime mortgage crisis in 2008, the quantitative easing monetary policy was adopted. There have been three consecutive easing of the currency, which slowed down the economic slowdown of the United States and laid the foundation for the subsequent strong economic growth. If the Fed’s right to monetary policy is deprived, then the US will experience another economic and financial crisis similar to 2008, which will lead to a sharp decline in the economy and the government will be difficult to cope with.
Third, countries have a policy tool – exchange rate policy. Central banks often influence the foreign economic activities of their countries by affecting the exchange rate. If Libra is widely used, then this exchange rate policy tool will also be deprived, because everyone can exchange currency and Libra to avoid the adverse effects of exchange rate policy adjustments.
Libra is shaking the international financial system, but has limited influence on China.
What impact will the Libra project have on the traditional international financial system, especially on China?
Jun Jun: It will certainly shake the traditional financial system, because Libra is equal to the currency of each country, and has formed a new currency. In this way, when people use money to measure prices and engage in various trading activities, different currency prices will be expressed. This kind of different currency performance will form a "bad currency expulsion". Good money."
In other words, when the currencies of various countries are against Libra, the exchange rate between the currencies of various countries, the exchange rate between the currencies of various countries and Libra will deviate from each other. Once there is a deviation, then we will find that the exchange rate of a certain currency is low, and A currency exchange rate is too high, then a large number of arbitrage activities will be formed, so that the money is not carried out for normal trading needs, but completely to obtain the difference, then it will cause a large amount of money in Libra and different Replace the hand between the currencies. For a while, everyone will compete for Libra, and another time they will compete to sell Libra, making the international currency relationship more volatile and chaotic. This will inevitably have an adverse impact on the stability of the entire international financial system and the world economy.
At present, the impact on China is small. This is because: First of all, there are very few Facebook users in China, which means that Chinese people have to be restricted by Libra. Secondly, China's regulation of currency is one of the most stringent countries in the world. Therefore, it is technically good to have a close relationship between Libra and the RMB. It is legally good and has difficulties. . Therefore, if Libra is widely used in trading activities in China, whether it is for redemption or use, it is a distant goal. Therefore, even if Libra is available, it will not have a significant impact on China.
What is the "Scorpio" that Libra can't cross?
What is the biggest obstacle to the Libra project if it wants to succeed? What do you think of its future development prospects?
Jun Jun: Libra's vision is difficult to achieve under the premise that sovereign currencies still exist. If Libra is used just like other virtual currencies and will not replace sovereign currency, in this case, governments and central bank monetary authorities will have some tolerance, just like the current Ethereum, Bitcoin, and even QQ coins. There is no substitute for sovereign currency yet. However, if we want to replace the sovereign currency, it will cross the bottom line acceptable to the government, and it will certainly be blocked by countries, so it will be difficult to survive and develop further.
To survive, Libra can only be limited to the same status as other virtual currencies. However, because Facebook is an Internet company with extensive influence in the world, Libra is likely to be higher than Bitcoin, Ethereum, QQ, etc., and its acceptance range is wider than other virtual currencies. But once it is possible to replace the sovereign currency, its vitality will end. For example, last year Bitcoin was widely used, and as a result, countries began to block it and then plunged. The same is true of Libra’s fate.
It wants to be a global currency and has a long way to go. Because this is not a problem that Facebook can solve, its condition must be the gradual integration of sovereign currencies. Just like the franc, the mark, the lira, and other European currencies, the euro zone is formed, and the euro is used uniformly. In the future, if the Asian region also implements monetary integration and forms the Asian dollar, then the relationship between Asian currencies will be closer. If, on this basis, North American and other local currencies begin to integrate, then the number of currencies and sovereign currencies will become less and less.
In other words, Libra has room for development when countries use the same currency. Because at that time, the real sovereign currency was gone, only the regional currency, and the regional currency took another step, it would form a global currency. This process is based on the degree of integration of the world economy and the continuous improvement of the integration of the currencies of various countries. This process has not been completed, and Libra cannot complete the leap.
The digital currency of the renminbi will also emerge
From Libra, what can China's Internet technology giants or policy regulators learn?
Jun Jun: Libra's revelation to us is that the future form of money is not necessarily the current electronic currency based on the physical currency. In the future, our legal currency or sovereign currency can also be in digital form or digital currency.
It is on this point that the People's Bank of China is studying that in the near future, it is possible that China's legal renminbi digital currency will also emerge. But this currency is still the renminbi, but it is a digital currency. At present, our country is pursuing the internationalization of the renminbi. In the future, the use of the renminbi's digital currency can also be used across China's borders.
Our current monetary currency based on physical currency has been used overseas, and the internationalization of the renminbi has made significant progress. In the future, Libra's RMB digital currency will still be the legal currency, and of course it can be widely used abroad. In other words, Libra's goals and assumptions, China can gradually learn from the digitization of the renminbi, drawing on some of its applicable elements, making the renminbi as a digital currency, to some extent, Libra's goal.
In the long run, in the future, countries around the world may gradually digitize the currency, causing the physical currency to eventually die out. When countries start to use digital sovereign currency or legal currency, and the degree of integration of money is constantly improving, it is finally affirmed. There is a currency, whether it is Libra or a digital currency similar to Libra issued by other international institutions. It becomes a digital currency in the true sense of the international currency, thus replacing other digital currency such as the renminbi. The digital currency of the dollar or the digital currency of the euro and so on. However, this is to wait until the natural integration of the world economy, financial and economic resources reaches a peak, and it will be a matter of course.
Source: Chinese and foreign management