Can Libra join forces with hundreds of consortiums to shake the sovereignty of China's legal currency?

Since June 18, Facebook released the Libra project white paper for global digital cryptocurrency, Libra has also been highly controversial. The biggest controversy is the impact of the stable currency Libra on the world of legal currency. According to the Libra white paper: “Libra's mission is to create a simple, borderless currency and financial infrastructure that serves billions of people.” It can be seen that Libra, which has a “basket” of currencies, has stable assets as stored value and mortgages, One of the core concepts is the currency attribute.

Currency is issued and controlled by the central bank of each country, and its credit endorsement comes from the authority of the state and the central bank. Behind the currency are regimes, interests, markets, and international diplomacy. Libra was given a monetary function, as Zhu Min, dean of the National Finance Research Institute of Tsinghua University, said at the 2019 World Economic Forum's New Champions Annual Meeting: "Libra's existing monetary system, financial system and future reserve system It will be a big shock."

Libra joined forces with hundreds of consortiums to shake the sovereignty of China's legal currency. Groups such as the domestic blockchain industry and the currency circle community are very concerned about the central bank's attitude toward Libra and what kind of response measures it will take. In fact, China is one of the countries that started digital currency research earlier in the world. Since 2014, under the strong advocacy of President Zhou Xiaochuan, the People's Bank of China has started research and development of digital currency.

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On July 8th, at the launching ceremony and the first academic seminar of the “Digital Financial Open Research Project” held in Beijing, Wang Xin, director of the Research Bureau of the People's Bank of China, delivered a speech introducing the domestic research process in the direction of digital finance. Major international organizations and central banks have discussed some concerns in the field of digital finance and financial technology. The speech also explained the impact of Libra's emergence on the international financial system, global financial stability, central bank monetary policy, etc. The central bank is highly concerned about Libra.

How will the central bank respond to Libra? In his speech, Wang Xin talked about the rapid development of technology in the digital age, which has reduced industry barriers, encrypted digital currency, especially the emergence of stable currency represented by Libra or in line with the inherent needs of the market itself, because the payment instrument and currency are of course less convenient. . But we can't completely follow this. We are still in a sovereign state, and there will be some stagnation or reversal in the future of globalization. We cannot be sure that the important financial sector involving national sovereignty can be opened to embrace. A super-sovereign currency, for a long time to come, the conflict between technology, market and national sovereignty will continue to exist.

But Wang Xin also pointed out that some directions are worth exploring and working hard. First, in the face of Libra's impact on fiat currencies and challenges from the international payment field, the central bank is deeply considering the strategy of strengthening the central bank's digital currency launch. In order to promote the research and development of the central bank's digital currency, the central bank digital currency research institute has been set up in Shenzhen and other countries. The region also works closely with the locals to develop the system. Wang Xin said 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 second is to explore how digital finance can better support the development of the real economy. Digital finance should develop diversified and comprehensive financial services to meet the multi-level and diversified financial needs of the real economy. We also need to strengthen the advantages of our digital HP finance to meet external challenges. Third, improve the institutional framework for financial technology supervision and develop regulatory technology. After Libra appeared, how do we strike a balance between national policy and market voice, Libra can be used domestically, is domestic company allowed to issue Libra's Chinese version of digital currency? These are all realistic issues that need to be studied in the future development of financial regulatory science and technology.

The last two points are to strengthen the construction of digital financial infrastructure and strengthen international coordination and cooperation in the field of digital finance. The digital financial infrastructure involves a series of technical issues, such as privacy protection and the security of financial infrastructure. International cooperation in the field of digital finance is a very important aspect. China needs to make its own voice on the international financial policy platform. In order to promote the development of digital finance, we can better safeguard China's interests in the discussion of international relevant policies, the formulation of rules and standards, and the competition for genuine products and services.

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