Hide the big plan to revive the sterling pound and uncover the mystery of the Bank of England’s digital currency plan

The era of financial technology explosion is officially coming

A huge change in the financial industry took place in 2019. On June 18th, after the release of the Libra white paper, the entire financial community in China was shaken. For some time, the People's Bank of China reported almost every day, showing a great degree of shock.

However, this financial reform did not actually begin in June 2019. The events of June 2019 were only the result. In 2015, the prelude to this reform was initiated. At that time, the Bank of England announced that it would issue a digital pound, becoming the first country in the world to issue digital legal currency. Why does the UK want to do digital legal currency, why the United Kingdom wants to mention "big central bankism", why should Britain open the RTGS in the central bank to experiment with technology companies? Many "why" have been plaguing researchers.

Digital currency status

• Science | What is the blockchain?
• Xiao Ge’s whimsy only used bitcoin to travel to Europe. In the first 40 hours, he didn’t like it…
• "I must come back to save this company!" Wu Jihan "forced the palace" to regain the position of the mainland

Now, digital currency has evolved into a two-tier system: retail digital currency rCBDC (or stable currency) and wholesale digital currency wCBDC, which are synthetic digital currency (sCBDC). Former British central bank governor Mark Carney said that the current financial technology reform began with the payment system. Indeed, the so-called wholesale digital legal currency is the interbank payment system. The digital legal currency was originally issued by the central bank. Later, IBM, the Swiss government, and the International Monetary Fund all proposed synthetic digital legal currency. The central bank and the technology company cooperated to issue stable coins, which were guaranteed by the central bank or the government. In 2019, the stable currency shocked the world.

The relationship between stable currency and digital legal currency is shown in the table below.

The history of the Bank of England's digital currency

The Bank of England is the first country in the world to propose digital legal currency. We tracked the Bank of England's digital currency plan from the beginning, but some of the Bank of England deliberately did not explain the reasons, so that it was not until 2019 that the entire plan could be seen slowly. In analyzing the Bank of England's five-year plan, we analyze its purpose and results based on their actual actions.

In 2014, when the Wall Street Journal did not publish important digital currency articles (January 2015), the Bank of England has issued an important report, "Innovations in payment technologies and the emergence of digital currencies." The authors are Robleh Ali, John Barrdear, Roger Clews, James Southgate. This article suggests that digital currency has many benefits that are not available in the current system. As stated in the article, there are three risks in the centralized financial system:

• Credit risk: A bank that pays is closed or in debt and cannot pay;
• Liquidity risk: The bank has money, but now there is no cash to pay;
• Operational risk: The system has a problem and cannot be paid.

After analysis, they believe that the first two risks on Bitcoin do not exist (as long as Bitcoin exists, they can complete the transaction without a bank), but the system has operational risks. And the digital token system can be very large. Once the system is compromised, the whole system will have problems, because it is the whole network accounting. In addition, it was found that almost all assets (stocks, claims, real estate) can be solved with the same technology.

After the report was released, in February 2015, the Bank of England proposed the “One Bank Research Agenda”, which made digital currency an important project. The digital currency appears in the fifth item of the plan, "Response to fundamental change." Please note that the word "fundamental" is rarely used abroad, which means that there will be great changes.

Also in 2015, the Bank of England later proposed the concept of digital currency (CBDC). In early 2016, the UK opened the world's first digital currency model RSCoin, and all central banks were studying the model. In the same year, the Bank of England published the first macroeconomics paper on digital currency. In September 2016, Bank of England Ben Broadbent proposed that digital currency will change the bank structure, and the first change is the clearing system, which can replace the complex settlement system.

Also in September 2016, the author heard the Bank of England report in London. The Bank of England believes that CBDC is the largest legal currency reform in 320 years. The Bank of England has to serve British banks, businesses and ordinary people. This is the big central bankism proposed by the United Kingdom. The central bank replaces some of the commercial banking business and directly serves merchants and individuals.

At the same meeting, the author also heard the macroeconomics speech of the digital currency of the Bank of England. Later, the Bank of England released a number of research results.

In early 2018, the Bank of England announced that it would no longer carry out digital currency projects, but it was involved in the research report of the three central banks, including the Bank of Canada and the Singapore Central Bank.

After the publication of the white paper by Facebook Libra in 2019, former Central Bank Governor Mark Carney gave a speech, referring to the Bank of England's direct and third party payment competition. This is an important reason for the Bank of England to implement digital legal currency. Take back. If the payment is processed by a third party system, the Bank of England cannot regulate it.

A few weeks later, Mark Carney proposed in the United States to replace the US dollar as the world's reserve currency based on a basket of legal currency. An imminent British central bank governor attacked the US dollar in the United States, surprised Americans. He does not say a basket of legal currency, but a digital hegemonic law based on a basket of legal currency, directly indicating that the digital legal currency (rather than the legal currency, especially not the US dollar) should become the world reserve currency. At this time, the Facebook Libra incident has shaken the world's central banks and commercial banks, but these are actually predicted on July 18, 2018, when IBM releases its stable currency.

Research methods

To analyze the reasons for the Bank of England to implement digital legal currency, it is necessary to look at the actual measures taken. As the saying goes, "The line is better than words." The most important thing to do research is not to look at official speeches or reports, but to see actual actions and subsequent comments on them. Some people in the United States say that the speech of the Fed chairman is a cryptographic language. Although they are all in English, financial experts who have a doctorate and have been practicing for many years cannot understand it. In fact, the speeches of the heads of important financial institutions may be the same, including the United Kingdom. Central bank governor. So to understand the real purpose of the central bank, we need to look at the plan adopted at the time (rather than interpreting their words), and later their comments on the project. At that time, no one could understand their actions. Why did they adopt this strategy? After the Bank of England talked about other things on different occasions, it was not careful to tell the original intention.

3 unsolved mysteries

There are three mysteries here. First of all, why is the Bank of England going to mention the “big central bank” digital currency plan? This problem has not been explained to the Bank of England until today. The central bank's doctrine is clearly unfavorable to British commercial banks. In 2019, the Libra coin white paper appeared, and it will steal the business of commercial banks. The world commercial banks all protested loudly. But it is very strange that the Bank of England proposed similar big central bankism, which is not good for commercial banks. In the past few years, it has not heard the voice of commercial banks. Do British commercial banks strongly support this big central bankism? At the same time, the Bank of England has proposed two different monetary policies. Is it not very troublesome to manage?

Another question, why does the Bank of England open a Real-Time Gross Settlement (RTGS) to experiment with technology companies? A related question, why does the Bank of England propose the next generation of RTGS system requirements? There is only one central bank in the world that opens RTGS to experiment with technology companies. It should be noted that the RTGS system is an important national system that affects the national economy. The transaction volume of RTGS is equal to a large part of GDP per year. Opening it requires a lot of pressure. Why is the Bank of England doing this?

The last question, why did the Bank of England Governor propose to replace the US dollar with synthetic digital currency in 2019? So what is a synthetic digital currency? Why use digital currency to fight against traditional dollars? This is not equal. It should be competition between French and French currency, and digital legal currency and digital legal currency. What is he thinking about?

Let us begin the road of revealing the secret, and give you a little bit of analysis.

The current situation seen by the Bank of England at the time

Bitcoin was born in 2008, but it was not until 2014-2015 that it was recognized by the financial market. At that time, the Bank of England did a very deep research on bitcoin payments and compared it with current bank cross-border payments:

In addition, the Bank of England also saw that in the United Kingdom at the time, most of the domestic payment transactions were no longer under the supervision of the Bank of England, and such payment systems (such as electronic payments and bitcoin payments) are still growing rapidly, traditional payments (in the Bank of England) Under supervision, there is no growth, or there are fewer and fewer people, which is a very serious matter for the UK. In addition, the British pound was originally the world's reserve currency, and its status was replaced by the US dollar around 1920. For nearly 100 years, Britain has been worried about this.

Possible reasons for the Bank of England to implement digital legal currency

According to our research, the Bank of England has proposed the digital currency plan for the following three purposes:

• Provide payment mechanisms to the British people, and guarantee the rights of both parties with the credibility of the central bank. In this way, the quality of service exceeds Bitcoin and Alipay.
• Take back third party payment supervision, including Alipay and Bitcoin to pay for the above transaction.
• Pushing the digital pound into a global currency (like Bitcoin is the world's digital currency), as long as there is a mobile phone, anyone can use the digital pound in any country, at any time (365/7/24), and all transactions are in the UK Under the supervision of the central bank, this may cause the pound to replace the dollar in the payment field, competing in the field through the digital pound and the traditional dollar.

The Bank of England only mentions the first purpose in public, and we will not discuss it. The second purpose is that the author and the international central bank meeting talked about it, and that the 2019 Bank of England Governor’s speech in the UK is equivalent to publicity [6]. Because we have already published the article, it is not discussed here.

But the third purpose is rarely mentioned. This is what this article is about to discuss.

Does the number of pounds want to be the world's universal currency?

When the author participated in the multinational central bank meeting in London in 2016, the Bank of England only mentioned the digital pound as the universal currency, and it was only a sentence. "We hope that the future pound will become the world reserve currency." This may seem like a fantasy of the Bank of England, not an actual plan. When the author and other scholars talked about the purpose, almost everyone thought it was a “Mission Impossible” and a daydream for the Bank of England.

Readers can think about whether this purpose is possible after reading the four layouts of the Bank of England.

First, American economists Bordo and Levin published an article in 2017, arguing that digital currency is an important item of the central bank, and if it does not, it will affect the national economy. This shows that the digital currency can be the lifeblood of the national economy.

Obviously, the Bank of England has done a lot of work to learn bitcoin. The layout of digital currency and the layout of Bitcoin are very similar. The only difference is that digital currency needs to be regulated (and bitcoin is evading supervision). But the number of pounds will be a global currency, like Bitcoin, 365/7/24 transactions, real-time clear settlement, as soon as a few seconds to complete the transaction, all transaction information can not be changed. So can the Bank of England's third purpose be achieved? Isn't this a great plan? This is simply "the British world currency dream."

In order to make the digital pound a global currency, the Bank of England even proposed to the central bank, that is, the central bank directly serves commercial banks, merchants, and individuals (that is, retail digital currency). If the figure is only for British commercial banks, it is not a global currency, it can only be a British domestic currency. This is the origin of the British central bank. This is an important key to unlocking the first mystery.

If you want to be the world's currency, the digital pound has its own monetary policy (at that time, negative interest). At that time, the Bank of England was ambitious and believed that this would be the largest legal currency reform in 320 years (and the first legal currency reform).

What they did not succeed was that they underestimated the difficulty of issuing digital legal currency. They thought that it would be fine to change Bitcoin or Ethereum into digital legal currency.

What practical plan does the Bank of England take to achieve this?

In order to realize this British dream, the Bank of England proposes the following series of plans:

1. Develop a digital legal currency running model RSCoin and conduct experiments;

2. Establish and develop macroeconomic models and rules for digital legal currency;

3. Design a next-generation RTGS system and experiment that can serve digital currency.

4. Open the Supervisory Sandbox Program to allow UK companies to conduct experiments under the supervision of current laws and regulations; These plans were publicly announced by the Bank of England, but the fourth plan was a British conspiracy. The regulatory sandbox program is to allow British companies to conduct experiments under the franchise that are not allowed by current regulations and to train new technology companies. This is indeed an important reason, but the more important reason is to give the Bank of England the opportunity to “learn” new technologies. We have done a lot of analysis on the sandbox plan in the past, so I won't go into details here, just discuss the other three projects.

Develop digital coin running model RSCoin and conduct experiments

The Bank of England proposed that the number of pounds to serve everyone, including commercial banks, businesses and users, is 365 days a year, 24 hours a day, high-speed payment operations. At that time, the Bank of England's most readable currency was Bitcoin, and it was greatly influenced by it. The RSCoin model was proposed to use Bitcoin's data structure UTXO. However, abandoning the workload mechanism (PoW) of the entire network verification, as long as some nodes verify, so that it can have better scalability, but also increase the complexity of supervision.

Later, Corda of R3 CEV studied RSCoin, and many of the designs were the same, including the use of UTXO models. RSCoin and Corda are not blockchain systems, they can only be called blockchain systems. In 2017, the Bank of Canada conducted an experiment and concluded that Corda did not meet the needs of the central bank and did not comply with the Principles of Financial Market Infrastructures (PFMI). Readers here can stop and think for a moment, and judge whether the direction of the RSCoin plan supports the realization of the third purpose, which is what we call "the British world currency dream"?

Establish and develop macroeconomic models and rules based on digital currency

In addition to the RSCoin operational model, the Bank of England also needs new macroeconomic theory. When the digital currency was run 24 hours a day, 365 days a year, and served all users (because it was retail digital currency), the Bank of England found that such a design changed the financial architecture.

The central bank has performed a lot of duties, so the central bank has more responsibilities and directly squeezed the business of commercial banks, because a large part of commercial banking has arrived at the central bank. Why does the Bank of England continue to do this?

In 2019, the European Central Bank also proposed not to support the deployment of retail digital legal currency. But why did the Bank of England want to do this in 2016? The Bank of England has put forward some economic theories, such as the digital legal currency policy and the monetary policy of the traditional legal currency. In the crisis, the common people will replace the traditional legal currency with the digital traditional legal currency. Because the digital legal currency exists in the central bank, there is no risk. They are worried that the digital legal currency will affect the legal currency, and later the principles of digital legal currency will be formulated to protect the national foreign exchange market to maintain the country's overall monetary policy. But it is very obvious that such a system is very complicated, and how to design these systems is still a research problem of the research institute.

The Bank of England has published several research reports, the most important of which is July 2016, The macroeconomics of central bank issued digital currencies (by John Barrdear and Michael Kumhof), and in 2018 5 The central bank's "digital currency design principles and balance sheet implications" (author Michael Kumhof and Clare Noone). Kumhof and Noone proposed the principles of CBDC as follows:

1. CBDC payment rate is adjustable.

2. CBDC and commercial banks are different in the central bank reserve and cannot be converted to each other.

3. Commercial banks (thus implying the central bank) do not guarantee that bank deposits can be converted to CBDC on demand.

4. The central bank only issues CBDCs for eligible securities (mainly government securities). The last two principles mean that households and companies can trade with CBDC in bank deposits on the market, and that additional CBDCs can be obtained from the CBDC interest rate and qualifying securities published by the central bank in the trading market. But not in commercial banks. Note that if the digital pound is a global currency, these exchanges are also global, open all day, 365/7/24. If the digital pound plan is carried out, the UK will return to the former "Imperial Empire", which does not close the store throughout the year, and the number of pounds can be used globally.

Readers can think about whether these models support the realization of "the British world currency dream"?

Designing next-generation RTGS systems and experiments that can serve digital currency

Digital currency is settled in real time, and now RTGS is the most important system for real-time settlement in the central bank system, so the Bank of England opened RTGS to allow technology companies to experiment and engage in the settlement of digital currency. RTGS is an important national system. If there is a problem in the system, most of the country's economic activities will be affected. However, the Bank of England announced in 2016 that it will open RTGS to the technology team for collaborative experiments. The UK is the first and only country in the world to open the central bank RTGS to experiment with outside teams. The experimental results are also expected. Because the RTGS system is complex, the blockchain was still in the very early stages of development. How the results of the experiment are not the most important, why the Bank of England wants to open the RTGS experiment is important, but the Bank of England has not explained clearly.

In September 2016, the Bank of England issued the "New RTGS system for the United Kingdom: Safeguiding stability, enabling innovation", which talked about the needs of the new generation of RTGS. Need to be connected to the blockchain. “Once new technologies, including distributed ledger technology, mature into the market, new RTGS services must be able to connect with them. Payment technology has recently made a lot of progress, such as timely retail systems including Faster Payments, mobile and online banking and foreign exchange trading. The calculations, including CLS." (The original "The new RTGS service must be capable of interfacing with a range of new technologies being used in the private sector, including distributed ledgers, if/when they achieve critical mass. Payments technology has already advanced Materially in recent years, with the adoption of real-time retail systems such as Faster Payments, mobile and internet banking and foreign exchange netting services, in particular CLS. ")

The Bank of England later felt that the 2016 version needed to be upgraded. In May 2017, the Bank of England released a new version of the next-generation RTGS blueprint (“A blueprint for a new RTGS service for United Kingdom”). The important conditions in the blueprint are shown in the table below.

Note that the blueprint above is full of blockchain ideas. Don't be fooled by these reports saying that “the blockchain system is not necessarily used” and that the Bank of England has not decided to use the blockchain. Looking at the content carefully, this is simply a "blockchain-based RTGS blueprint." For example, “accessibility: facilitating financial institutions and infrastructure to obtain central bank liquidity settlement more directly” is the realization of central bankerism.

The Bank of England opened RTGS in March 2018 to experiment with four technology companies, just to prove that the central bank RTGS can be connected to the blockchain system. The results of the experiment were released in July 2018. The participating teams only have 2 team systems that can be connected to the RTGS system. The other 2 teams' systems and the central bank RTGS system are far apart and cannot be connected. The participating teams are Baton, Clearmatics, R3 and Token.

In March 2018, the Bank of England reported: "Although we believe that distributed ledger technology is not mature enough to provide the core of next-generation RTGS, it attaches great importance to ensuring that new services can interface with distributed ledger technology and is more widely The sterling market is developed on the market.” (Original for the bank has concluded that Distributed Ledger Technology (DLT) is not yet sexually mature to provide the core of the next generation of RTGS, it placed a high priority on ensuring that the new Service is capable of interfacing with DLT as and when it is developed in the wider sterling markets." )

Isn't the Bank of England's RTGS blueprint and related experiments prepared to make the digital pound the world's universal currency? The above table illustrates the five requirements in the new blueprint:

1. Increase reliability (is this prepared to make the pound a reliable universal currency?);

2. Expanding the RTGS business to support non-bank institutions (recalling the big central bankism, the same idea as digital tokens serving global users, is it ready to make the digital pound the world's universal currency?);

3. Connect (outside the central bank) blockchain system (Is it expected that the central bank's external system will be a lot of blockchain systems in the future? Is this ready to issue universal currency?);

4. 24/7 service (this is the same as the digital token idea, trading all day, is it ready to make the pound become the universal currency?);

5. Real-time regulation reduces risk (is this prepared for the Bank of England to monitor real-time digital GBP transactions?). The above requirements are based on the blockchain RTGS system requirements. Readers can judge for themselves whether these are prepared for the issuance of a global currency? Is this to make the Bank of England the world's first “digital central bank” based on blockchain?

1st and 2nd mystery:

Now we can solve the first and second mystery, that is, the UK is prepared to make the digital pound the global currency, issued and guaranteed by the Bank of England (so British commercial banks cannot), and 365/7/24 is engaged in payment and worldwide. transaction. Because the volume of trading is expected to be very large, the Bank of England can only open RTGS for real-time settlement. However, because the RTGS could not be connected to the blockchain at the time, the Bank of England was very anxious and proposed a blueprint for the second edition. It is hoped that the technology company can provide technical support to complete this great business.

Since this must be issued and guaranteed by the central bank, the British commercial bank is willing to support the digital pound as the world's reserve currency, and the central bank and commercial banks cooperate, the commercial bank also handles the digital pound business. In 2019, Fnality produced USC to synthesize the pound, and the British Commercial Bank participated in the establishment of the system.

Because most of the digital pounds will remain overseas (overseas markets are bigger than the UK domestic market), not in the UK, the digital pounds require different monetary policies. So the digital pound and the traditional pound have different monetary policies.

In the UK's digital sterling scheme, the main battlefield was not in the UK, but in global payments, trade finance, stock markets and other financial sectors. The 365/7/24 service is only required for the global currency. This explains why the UK has announced her digital pound plan aloud, and the United States has remained quiet.

Untie the third mystery

Now to solve the third mystery, the key to solving the puzzle here is the speech by the Bank of England Governor on August 24th in the United States. As I said before, the Bank of England did not explain at the beginning, but afterwards it was accidentally said the original intention for various reasons.

Beijing time on the 26th, the Bank of England Governor Mark Carney gave a speech at the annual meeting of the global central bank held in Jackson Hole, Wyo., on Friday, urging global central banks to join forces to create a multi-polar reserve currency system, calling for Creating a cryptographic digital reserve currency like Libra to end the dollar and reduce potential risks should consider weakening the dollar spillover effect as a long-term goal.

Carney told other policy makers and academics that central banks must respond to the current situation in the short term. But he also warned that "blind acceptance of the status quo is wrong" and ultimately requires dramatic measures.

His most striking view is that the status of the dollar as a global reserve currency must end, and some form of global digital currency – similar to Libra proposed by Facebook (187.89, 1.51, 0.81%) – would be better. select. This would be better than letting the dollar's reserve status be replaced by another country's currency.

Carney is more sympathetic to Libra, but he said in his speech that the public sector would provide a new "synthetic hegemonic currency (SHC)" through the central bank's digital currency network. Readers can continue to think about this, what is this “synthetic hegemonic currency”? We have published several articles on Fnality USC [1, 3, 4] in the past month. You can look at the comparison of the table below, and you may understand.

It can be seen that the synthetic hegemonic currency he said is very similar to the Fnality USC. The only difference is that one is retail and the other is wholesale. However, once the synthetic digital legal currency is completed, the retail digital legal currency can be extended from the basis of the wholesale digital legal currency.

The Fnality USC was developed based on the reports of the three central banks led by the Bank of England. It is actually the idea of ​​the Bank of England, and Fnality is also a British company. The Bank of England and Fnality collaborate to establish a harmonious digital currency. What does this mean? Does he say that the US dollar-dominated digital currency system replaces the US dollar? Or to be more clear, let the synthetic digital currency replace the traditional US dollar as the world reserve currency?

There are two key points here: one is the digital legal currency to replace the traditional dollar; the second is the British technology. This may be the real purpose of the Bank of England to recapture the British financial hegemony that has lost nearly a hundred years!

Is the UK daydreaming?

When the author and many scholars talked about this matter, almost no one took it seriously and thought it was a British daydream. Is this really a daydream?

First of all, the main reason for thinking that this is daydreaming is that UK GDP is now ranked 7th in the world and in Europe it is only the third (loss to Germany and France). With such national strength, the currency issued is simply not a universal currency. According to the old currency competition theory, this view is correct.

However, according to our new theory of currency competition, speed, security, regulation, and policy are the four major competitive factors [8], with speed being the head. In pounds to the US dollar, the pound has no strength at all, but the number of pounds is converted into the traditional dollar. The number of pounds is much faster than the traditional dollar, and the pound is strong.

The National Monetary Fund released a report in July 2019, which mentioned an important concept, consistent with the four major competitive factors we mentioned: speed is the biggest key to user choice. When the number of pounds is trading hundreds of times faster than the traditional dollar, users will choose the number of pounds. So the number of pounds has an advantage, and until today only the Bank of England opened RTGS to experiment with digital currency, preparing to handle a large number of real-time transactions (unlike Alipay and traditional bank payments). This is not the Bank of England's quest for nothing. This is a preparatory work for the issuance of a global digital currency.

Use the speed of trading to occupy the market

Let's take a look at the global payment market. According to the report [21], global digital payments will reach 726 billion US dollars in 2020, and the entire payment market will be more than 2 trillion US dollars. If the number of pounds appears, how many markets will it occupy? This will be the competition for digital sterling and payment companies such as Alipay in the market. The number of pounds will have an advantage because 1) the number of pounds is guaranteed by the world's major central banks; 2) the speed is fast; 3) the real-time settlement. Bitcoin can't compete with the digital pounds at all, and Alipay can't, they don't have a central bank behind. If the number of pounds can account for 1/3 of the market, the Bank of England will have 666.6 billion transactions a year. If it can occupy such a market, the world financial market has changed dramatically, and the digital pound will become the universal currency. The picture below shows the global payment market data.

Some people may say that the amount of global payments is not big enough, and that payments alone cannot shake the dollar. Completely correct. However, the digital legal currency not only changed the payment market, but also the financial activities such as the stock market, futures, and trade finance. The Bank of England governor did not say that the financial system has changed because of changes in the payment system. [6] In the Fnality white paper, the changes in the payment system will be a major change in these financial markets. For example, traditional CSD can be replaced by blockchain. These changes are not small, and they will increase the share of digital pounds.

By the same token, global trade finance will also change because of a single digital pound, as a single digital currency is much more convenient than using two types of legal currency. The trade finance market is much larger than the payment market. If one-third of the trade finance market is settled by the number of pounds per year (which is already more than today's UK GDP), the UK's GDP will skyrocket.

When the digital pound is used in global trade finance and global payments, plus other marginal effects such as stocks, the UK's GDP has risen. At that time, the status of the United Kingdom was not the current status.

Of course, this is assuming that the rest of the world will not launch its own digital currency to compete. In the real world, other countries, including the United States, will certainly develop their own digital legal currency to compete. However, when the Bank of England announced the digital legal currency, the Fed has not followed up, and most other countries are waiting to see. It should be that they have not yet understood the dream of the Bank of England. Why didn't you understand? Because everyone thinks that the economy is the most important. The United States and China have the largest volume, and these two are the bosses. Other countries simply cannot compare them. Britain's GDP is now only 1/7 of the US.

New digital economic principles

In the digital economy, speed is the first priority. Whoever has the speed, whoever owns the market, who has the market, who is the next wave of the boss. If the digital pound sterling plan is successful, the biggest opponent in the United States is not China, but the United Kingdom that has been obedient to it! Not only is the speed of the system important, but in the traditional economic theory, the rate of economic growth is also an important indicator. After observing and analyzing the various empires in history, the famous economic historian Paul Kennedy believed that the success or failure of an empire lies in the growth rate, not the mass at that time. In his book The Raise and Fall of the Great Powers, he used this to explain the rise and fall of the Empire in history, including the Ming Dynasty of China (the Ming Dynasty was the world's great empire).

The Bank of England sees that the number of pounds will occupy the market because of the speed of the transaction, which will increase the economic growth rate. Once the economic growth rate increases, the national strength will increase greatly, which will bring the UK's new economic highland. This is the real reason for the Bank of England to open the digital pound plan. Because the two accelerators were seen, the Bank of England opened their British dream plan.

This also shows that in the digital economy environment, financial technology is the foundation of the country.

references

[1]. Cai Weide, Jiang Xiaofang, “Reconstruction of Global Financial System Based on Wholesale CBDC Digital Currency”, 2011.10.01.

[2]. Cai Weide, Jiang Xiaofang, "The ambush on ten sides, commercial banks really want to be embattled? – Interpretation of the 2019 IMF's 'Rising of Digital Money' report", 2010.09.21.

[3]. Cai Weide, Jiang Xiaofang, “W-CBDC-based payment system architecture: Fnality white paper interpretation (on)”, 2019.10.06.

[4]. Cai Weide, Jiang Xiaofang, “Wholesale Digital Legal Currency Reconstruction of Financial Markets: Interpretation of Fnality White Paper (Part 2)”, 2019.10.10 [5]. Cai Weide, “The Three Principles of Digital Law: Important Information Brought by Facebook Libra ",2019.08.24.

[6]. Cai Weide, Jiang Xiaofang, “The Bank of England pays for third-party payments and digital tokens – in the form of a British gentleman”, 2010.06.27.

[7]. Cai Weide, Jiang Xiaofang, "The new currency competition is coming? Yes!", 2011.0.06.

[8]. Cai Weide, Jiang Xiaofang, “Analysis of Four Key Elements of New Currency Competition”, 2010.08.17.

[9]. Cai Weide, "authenticity and stability of the currency! Blockchain needs to be regulated", 2011.05.28.

[10]. Cai Weide, Jiang Xiaofang, Liu Wei, “The fourth largest pit of the blockchain (middle) – blockchain fragmentation technology is an extended solution?”, 2018.8.2.[11]. Cai Weide, Jiang Xiaofang "The fifth largest pit of the blockchain (below) – talk about blockchain from the perspective of PFMI", 2011.08.16.

[12]. Cai Weide, Jiang Xiaofang, "PFMI Series 2: The Clearing Chain's Design Road", 2019.01.05.

[13]. Cai Weide et al., “Panda-CBDC Central Bank Digital Currency Model”, 2016.11.05.

[14].BIS CPMI, Central Bank Digital Currency (CBDC), Mar.2018.[15].The Bank of England, MAS, the Bank of Canada, Cross-Border Interbank Payments and Settlements: Emerging opportunities for digital transformation,Nov .2018.

[16].The Swiss Federal Government, Legal Framework for distributed ledger technology and blockchain – An overview with a focus on the Financial sector, Dec.2018.[17].https://www.treasuryxl.com/news-articles/ Csds-have-a-role-to-play-in-a-blockchain-environment/

[18].Oxera, The debate about blockchain: unclear and unsettled?Aug.2016.

[19].Fnality, The catalyst for true peer-to-peer financial market, June 2019.

[20].Tsai, Wei-Tek, et al. "A system view of financial blockchains." 2016 IEEE Symposium on Service-Oriented System Engineering (SOSE). IEEE, 2016.[21].https://www.cnbc .com/2017/10/09/digital-payments-expected-to-hit-726-billion-by-2020-study-finds.html

[22]. Paul Kennedy, The Raise and Fall of the Great Powers

Author:

Cai Weide

Director of Digital Society and Blockchain Laboratory of Beihang University, Chief Scientist of Tiande Technology, Major Project Leader of National Ministry of Science and Technology, Director of Blockchain Internet Lab of National Big Data (Guizhou) Comprehensive Experimental Zone, Tianmin (Qingdao) International Sandbox Research Dean of the Academy, Honorary Dean of the CCID Research Institute of CCID (Qingdao), President of the Blockchain Industry Professional Committee of China Asia Economic Development Association, Director of the North Mujin District Block Chain Committee

Jiang Xiaofang

Ph.D. student of Beihang University of Computer Science, Chartered Financial Analyst (CFA), Beijing Financial Analyst Association

We will continue to update Blocking; if you have any questions or suggestions, please contact us!