It’s crazy again! Bitcoin is worth $13,000. Why did the central bank twice mentioned digital currency R&D in half a year?

Bitcoin has recently returned to the public's view with a rising trend. On the morning of July 10, Bitcoin returned to US$13,000, a new high in two weeks; the total market value of Bitcoin was US$230.8 billion, which rose to 64.8% of the total market value of the global encryption market. This proportion has also been refreshed since 2017. New high since April.

The incitement of Bitcoin, coupled with the high level of Facebook's cryptocurrency project Libra, has also caused the players in the currency to “regain their faith”. At the same time, the development of the “regular army” central bank digital currency has also attracted widespread attention.

On July 8, Wang Xin, director of the Central Bank Research Bureau, revealed that the State Council has officially approved the research and development of the central bank's digital currency. At present, the central bank is organizing market institutions to engage in corresponding work.

Bitcoin's active total market capitalization hit a new high

On the morning of July 10, Bitcoin returned to $13,000, a new high in two weeks. The total market value of Bitcoin was $230.8 billion, rising to 64.8% of the total market value of the global encryption market, a new high since April 2017.

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Source: CoinMarketCap

Recently, the concept of A-share blockchain was active. On the morning of the 10th, many blockchain concept stocks opened higher. At the close, the blockchain concept index rose slightly by 0.34%. Digital certification, Heren Technology, Monternet Group, Shenzhen Dashong and other stocks rose more than 5%.

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Source: Straight Flush

On July 9, US time, the world's largest futures exchange, the CME Group's bitcoin main contract rose for two consecutive days, hitting a new high since June 26 this year. All term contracts rose more than $300 a day, closing above $12,000 for two consecutive days, with the December contract surpassing the $13,000 mark.

BCtrend analyst Jeffrey believes that bitcoin traffic and market sentiment have both rebounded to this year's highs and will continue to rise in the short term.

Is the bubble reappearing, or is it a "bull market" restart? The reasons behind the price increase are crucial.

From the current market point of view, the price of this cryptocurrency soared, mainly because Facebook's cryptocurrency Libra improved the fundamentals and is expected to help Bitcoin reproduce the glory of the end of 2017.

CMC Markets, a UK financial trading firm with about 80,000 customers, said in a recent survey that Facebook’s plan to stabilize the currency Libra last month has seen a significant increase in investor advisory on cryptocurrency derivatives since mid-May this year. The Facebook announcement plan not only helped raise public awareness of cryptographic assets such as Bitcoin, but also provided more mainstream legitimacy for the entire industry.

Facebook Libra, change the world or open the box?

On June 18th, the social media Facebook cryptocurrency project Libra was born, causing intense discussion. Some people regard Libra as a “super-sovereign currency”. Others believe that Libra, which was born out of the world, will reshape the international monetary and financial system.

At the beginning of the white paper, Libra succinctly demonstrates its mission: to create a simple, borderless currency and financial infrastructure for billions of people.

Libra's white paper repeatedly emphasizes its ambitions in global transfers and payments, so that “transferring funds around the world is as simple and cost-effective as sending text messages or sharing photos, even more secure and reliable.”

Does libra really break the traditional finance and become the world's first cryptocurrency without borders and no fees?

Wang Xin said that Libra may have a major impact on the monetary policy, financial stability, and even the international monetary system.

However, libra still faces many obstacles to becoming the world's first borderless and cryptocurrency without fees. The biggest obstacle is the regulation from various countries around the world.

French Finance Minister Lemaire said that Libra should not be seen as a substitute for traditional currency, it must not, and cannot be, a sovereign currency. Governments have the right to "request some guarantees from Facebook."

Both the Bank of England Governor and the Federal Reserve Chairman said that Libra is facing high standards of regulatory requirements.

The governor of the Reserve Bank of Australia said that Libra has a lot of regulatory issues to solve, and he always believes that cryptocurrencies will not land in Australia.

Mu Changchun, deputy director of the central bank's payment and settlement division, said that Libra created a convertible digital currency that flows freely across borders. The emergence and development of such stable currencies, whether from the implementation of monetary policy or macro-prudential management, are inseparable from the support and supervision of the central bank, as well as the regulatory cooperation between central banks and international organizations.

The central bank twice mentioned the development of digital currency in half a year.

The attitude of the national regulators to Libra, after being caught off guard by the first time, is gradually giving an answer, and the first clearer answer is to increase efforts to develop the central bank digital currency.

The digital currency is defined by the European Banking Authority as “a digital representation of value, not issued by the central bank or the authorities, nor linked to the legal currency, but because it is accepted by the public, it can be used as a means of payment and can also be transferred, stored or traded electronically. ”

When it comes to digital currency, Bitcoin is the first thing that comes to mind. Digital currency such as Bitcoin is more like an investment product. Because of the lack of a strong guarantee institution to maintain the stability of its price, its role as a value scale has not yet appeared, and it cannot reflect the function of payment means.

However, when the national entity develops digital currency, the situation will be different.

Wang Xin pointed out that the digitization of the central bank's currency will help optimize the central bank's monetary payment function and increase the central bank's monetary status and monetary policy effectiveness. The central bank's digital currency (CBDC) can become an interest-bearing asset that satisfies the holder's reserve demand for safe assets and can also become the lower limit of bank deposit interest rates. Central bank digital currency can be a new monetary policy tool. First, the central bank can adjust the central bank's digital currency interest rate to affect the bank deposit and loan interest rate; the second is to help break the zero interest rate lower limit.

It is understood that the People's Bank of China is one of the first central banks to conduct research and experimentation on digital currency. Unlike the digital currency that most people understand, the digital currency issued by the central bank is actually a “digital legal currency”. Wang Xin said that the central bank The digital currency is defined as M0 in China and is a certain degree of substitution for cash. It is difficult for cryptocurrencies such as Bitcoin to function as a currency. It can only be called cryptographic assets, and has limited impact on fiat currencies and monetary policy.

This is the second time that China’s central bank has publicly promoted the development of digital currency in the past six months.

In February of this year, at the National Monetary and Gold Work Conference in 2019, Fan Yifei, deputy governor of the central bank, proposed to steadily push forward the research and development of central bank digital currency and strengthen the monitoring and disposal of virtual currency.

In fact, China's central bank attaches great importance to the study of digital currency, and the research and development of digital currency has been promoted for several years.

In 2014, under the advocacy of Zhou Xiaochuan, the then central bank governor, the central bank set up a special research group for issuing digital currency and began research and development on digital currency and central bank digital currency.

In 2015, the Financial Research Institute established the Internet Finance Research Center.

In May 2017, the Central Bank Digital Currency Research Institute was officially listed, and conducted in-depth research on digital currency issuance and business operation framework, key technologies of digital currency, distribution and circulation environment, and legal issues faced, in order to strengthen the research and planning of financial technology work. Coordinate with the overall planning.

In September 2018, the Institute established a trade finance blockchain platform. At present, with the approval of the State Council, the central bank is organizing market institutions to jointly conduct research and development of DC/EP (payment instruments with digital currency characteristics).

Digital currency analyst Xiao Lei said that from a strategic point of view, it is necessary to establish a digital currency suitable for internationalization. The digital currency with Chinese characteristics cannot be simply a technical upgrade. The process of digitizing the legal currency must be at least three. Features: The first is to have international currency attributes, similar to the current offshore market of the RMB, etc., which can be directly issued overseas; the second is to have enough application scenarios, at least with the help of Chinese Internet giants, or other The financial business network comes to the ground; the third is to have real asset endorsements, such as gold.

Author: Zheng Ya Shuo

Source: China Securities Journal