Long Baitao | Central Bank Digital Currency-Global Consensus and Division

Introduction

The writer is Long Baitao, executive deputy director of the Academic and Technical Committee of the Digital Asset Research Institute and independent researcher of the digital economy. With the rapid development of digital economy and financial technology innovation, how do major economies around the world treat payment innovation and central bank digital currencies? What is the future of central banks ’digital currencies? This article gives valuable references from multiple perspectives.

This article is 17,400 words and the reading time is 25 minutes.

Highlights:

1. The rise of crypto assets, the entry of large technology companies into the financial services sector, and the rise of global stablecoin have all challenged the currency and payment system. Facing this challenge, how does the global central bank deal with the impact of technological innovation on currencies and payments?
2. How can global central banks consolidate their monetary authority by providing "central bank public goods"? How has the history of failed monetary governance cases affected regulatory perceptions of Libra?
3. How does the US “long-arm jurisdiction” in the international payment system respond globally? Faced with the payment knowledge, skills and infrastructure of non-European companies, how can Europe defend its payment autonomy? Why is the global fast payment system keen?
4. What are the positions of major global economies in issuing their respective CBDCs? What differences do these positions show in the major economies? Will the Fed support Libra's hidden intentions? What is the mystery behind the European Central Bank's choice to issue a wholesale CBDC rather than a retail CBDC?
5. As one of the world's major economies, how will China and the central bank respond in this new currency war? What institutional advantages does China have?

Author's note: This article is the author's examination of the central bank's digital currency from the perspective of the central bank. Therefore, the opinions in the article do not necessarily represent the author. Readers should pay attention to distinguish between the central bank's perspective and the author's analysis of the central bank.

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Driving forces shaping the pattern of the international monetary and financial system

In the past few years, three developments have pushed the reform of the currency and payment system to the forefront. They are the rise of Bitcoin and crypto assets, the entry of large technology companies into the financial services sector, and the rise of global stablecoins represented by Libra.

When extending the horizon to a more macroscopic world beyond digital currency, we find that there are seven driving forces that are shaping the status quo and future structure of the international monetary and financial system. They are:

First, the monetary policy-making institutions of major economies (such as the Federal Reserve FED and the European Central Bank ECB) and international standard-setting institutions (such as the BIS, the Financial Stability Board FSB, and the International Monetary Fund IMF) are the decisive forces. At the core of their power is a group of central bank technical bureaucrats, bankers and scholars who represent "multinational capital groups that do not represent any sovereign country or nation." This group's perceptions, decisions, and actions shape the global digital financial regulatory landscape and determine how digital currencies are integrated into the global financial system. When Facebook released the Libra plan, the French National Bank of G7, the G7 rotating chairman, entrusted ECB Executive Committee Benoît Cœuré to lead the Stablecoin Working Group to investigate it and submitted the Global Stablecoin Survey to the G20 Finance Ministers and Central Bank Governors Meeting in April The Report (hereinafter referred to as the "G7 Report") describes the challenges that stablecoin brings to the regulatory and public policies. After the G20 meeting, the FSB stablecoin working group has taken over the work of formulating stablecoin supervision policy recommendations from the G7 working group. It is expected that a preliminary draft of the consultation report will be submitted in April 2020. This shows that global regulation has reached a consensus and entered the stage of stable currency regulatory policy formulation, which means that it is ready to make legal and regulatory preparations for the launch of stablecoins. In contrast, crypto assets such as Bitcoin have been developed for more than 10 years, and global regulation has not yet formed a unified regulatory approach. This shows that the stablecoin has the potential to become "money" and has attracted strong attention from designers of the top-level system and order of the monetary and financial system. When monetary policy-making institutions in major economies, such as the Federal Reserve, the European Central Bank, and the People's Bank of China, face the challenges of the currency and payment system, their consensus is to improve the existing payment system to better meet users' payment needs. But there are obvious differences in whether to develop Central Bank Digital Currency (CBD) and what type of retail (wholesale or wholesale) CBDC is, which is related to their position in the international monetary and financial system.

Second, large-scale technology companies based on DNA (Data Analytics, NetWork Effect and Interwoven A ctivities) business models, with a large user base, complete economic ecology and big data and big data processing experience, penetrate and dominate a market, And through technology to establish barriers to competition, traditional financial companies have become heavily dependent or even disintermediation. These large technology companies usually set up a private network platform and closed and isolated ecosystem with payment as the center and centered on it. Many have also developed payment-centric financial services, such as loans, wealth management, and insurance, which have subverted the banking-centric industrial organization structure of the traditional financial sector. Big tech companies have played a decisive role in driving innovation and better payment services. For example, in China, mobile payment transactions accounted for 16% of GDP in 2018, and Alipay and WeChat Pay accounted for 93% of mobile payment market share. Large technology companies have also entered the core area of ​​traditional banks-currency issuance. In fact, in China, Ant Financial and WeChat Pay have long realized and developed the RMB digital currency business in the form of opening up money market funds and payment functions. Ant Financial's currency market fund Yuebao Assets has exceeded RMB 1 trillion in assets. This accounts for about 0.5% of the broad RMB (M2). But it wasn't until Facebook's launch of the Libra plan that large tech companies entered the currency issuance worldwide. They all provide their own payment tools and currencies on private network platforms (although they are anchored in fiat currencies), and these networks are used for payments and transactions in digital form. This is what Cœuré believes will "influence the future shape of the international monetary and financial system The most subversive concept-the digital currency zone. " A concept related to the digital currency area is digital dollarization, which means that the fiat currency of an economy is replaced by other digital currencies. Economies that are economically or socially open to large digital currency areas are particularly vulnerable to digital dollarization, even in economies with stable monetary systems. When responding to the challenges of private digital currency initiatives by large technology companies, each economy has different strategies, which have profoundly affected the future pattern of the global monetary and financial system.

Third, the strong spillover effect of the global monetary and financial system, dominated by the US dollar, is the root cause of the vulnerability of the international monetary and financial system. This has also gained widespread consensus within the globally integrated elite community. For example, Mark Carney, Governor of the Bank of England, said that "the dollar-based global monetary and financial system is unsustainable, and a basket of synthetic hegemonic currencies based on the multinational CBDC network and provided by the public sector may be the best alternative." Claudio Borio, head of the BIS currency and economics department, said that the greatest vulnerability of the international monetary and financial system comes from "total capital flows and accumulated inventories," in which easing bias has spread from the core economy (which implies the United States) to the rest of the world, a country The easing has led to easing around the world; foreign exchange intervention tools used by various emerging economies have effectively reduced unwanted spillover effects.

Fourth, the RMB internationalization has gone through a long period of effort but no progress. Trade in goods and services denominated in RMB is less than 2%, and the global reserve currency is less than 2%, which is seriously out of proportion to China ’s position in one-sixth of the global economy. The emergence of a global stable currency like Libra may not only erode the currency sovereignty of the renminbi, but also pose greater challenges to the internationalization of the renminbi. Since 2014, the People's Bank of China has started research on the Digital Currency / Electronic Payment: DC / EP of the central bank. It is reasonable to speculate that enhancing the strength of RMB internationalization is the original intention of the central bank to develop DC / EP.

Fifth, the popularity of online transactions and cross-border transactions has spurred consumer demand for more secure, convenient, fast and low-cost cross-border payments. The wave of globalization, the rapid development of online services, and the growing number of services delivered in digital form are driving this change. Global travel traffic has doubled in the past 15 years, the number of Internet users has doubled, and the number of mobile phone users has doubled. In just 10 years, global remittances have increased by more than 50%, and cross-border e-commerce activities have tripled. As a result, emerging private payment solutions are aimed primarily at consumers and workers, not merchants. Consumers and workers constitute a larger potential user base and generate related network effects, which means that new digital currency initiatives may be quickly accepted by users. Traditionally, international payments are mainly made by companies, merchants, banks and governments, and their use of international currency has historically been very inert. Available evidence suggests that transaction and conversion costs are much smaller for retail consumer payments than traditional currencies used for wholesale cross-border trade and finance. This network effect is stronger for the global network and may make international currency competition a more dynamic competition in the future.

Sixth, the rise of non-bank participants and changes in consumer payment preferences are driving the increasing digitalization of non-cash payments. This has led to a sharp decline in cash usage in some countries, from Sweden to China. Today, the "focus" of payments is shifting to these new players, especially large tech companies. This displacement poses a challenge to the economic model of the bank, but may also pose a threat to the sovereignty of the currency of sovereign states. For example, in Europe, payment infrastructure, knowledge, and technology are mainly owned by non-European companies; in China, Alipay and WeChat Pay account for 93% of the mobile payment market, and most transactions are conducted through their private network platforms.

Finally, the development of blockchain technology driven by cryptopunk and tech geeks. This force ignited the first fire of the digital economy and continues to contribute innovation and ideas to it. The first wave of the digital economy is the rise of cousins ​​of Bitcoin and crypto assets (such as Ethereum, etc.), but because of extremely high volatility, (controversially) lack of intrinsic value, unpredictable transaction costs and confirmation delays, governance Opacity and other reasons have prevented them from being used as a reliable currency tool and are currently mainly used for speculation. Although the second wave of cryptocurrency stablecoins was also driven by this force, the real mainstream concern began when large technology companies entered the stablecoin field. The shortcomings of this force are as prominent as the advantages: the advantages are driven by idealism (pure democracy and decentralized ideas), exquisite technology, endless innovation and strong community influence; the disadvantages are that extreme idealism will hinder the tradition The world converges and easily falls into the niche and non-mainstream. Technology-driven means the lack of theoretical guidance (such as Satoshi Nakamoto's "currency" ideal may never be realized) so it is easy to go astray (ICO / IEO and so on In the end a feather). Therefore, this force can continue to contribute disruptive technologies and concepts to the digital economy, but it cannot become a decisive force for the future currency landscape, or even a force with key influence.

Each of these issues raised its own questions about the basic architecture of the currency and payment system. The debate over the future of currencies and payment systems triggered by them has just begun. But global central banks have made it clear that they need to address issues related to technological innovation and its impact on currencies and payments in a more proactive manner, and they must also ensure that innovation guarantees legal determination, sound governance, financial stability, and compliance with high compliance standards Without hindering useful innovation. Although global central banks have significantly different views on whether to develop CBDCs and what type of CBDCs, they have broad consensus on strengthening the nature of central bank currencies as a public product, strengthening monetary governance, and supporting innovative payment solutions.

Skyscrapers and central bank public goods

Anyone who comes to Shanghai may admire the 632-meter-high Shanghai Center, the tallest building in China, which is inserted into the sky like a saber. When people praise it for its majesty, it often overlooks its foundation more than 80 meters underground. However, you cannot say that the foundation is not important because the foundation is not visible. On the contrary, the foundation is very important. I used the term "skyscraper on the beach" to describe Libra. We use the same approach to look at the currency and financial system-money and financial architecture need a solid foundation, just like skyscrapers. Building these foundations is the responsibility of the central bank. As invisible as the underground foundation of a skyscraper, the role of the central bank may be invisible to most people, but it must exist there and support the monetary and financial system.

The foundation that the central bank has established for the currency and financial system is the "public product of the central bank." The monetary system is built on trust in money. This is something that only the central bank can provide. Like the legal system and other public goods, the trust supported by the central bank has the attributes of public goods. Former Governor of the People's Bank of China, Zhou Xiaochuan, said at the end of 2018 that "the private sector can participate in the digital currency system, but it needs a public spirit." BIS general manager Agustín Carstens said, “The monetary system is a public product that underlies the entire global financial system, and the public sector needs to play a leading role in this process.” In the recent “The Future of Money and Payment Systems: What Role Does the Central Bank Play? ? "In his speech, Carstens explained that by fulfilling the four roles of the modern two-tier payment system, the central bank provided" public goods of the central bank "and strengthened the public's trust in currency.

Modern payment systems have two levels. The central bank is the bank of a commercial bank. This two-tier system is the epitome of an account-based currency system. The central bank opens accounts to commercial banks and other payment service providers (PSPs) so that domestic payments are settled on the central bank's balance sheet. The key to the secondary system is the unique status of the central bank, which plays four key supporting roles.

The central role of the central bank is to provide units of account in the monetary system. When we see a dollar bill, it represents the Fed's promise to provide holders with one dollar. From this basic commitment, all other commitments in the economy follow.

The central bank's second role is to use its balance sheet as a settlement tool to provide finality of payments. The central bank is established in accordance with the law to achieve a reliable intermediary institution that debits payee accounts and credits payee accounts. Once the debit and credit account is completed through the central bank account, the payment is final and irrevocable. From the perspective of the central bank, the finality of payments provided by the central bank is incomparable with Bitcoin. In the bitcoin world, everything operates through decentralized consensus, and what consensus says is recognized as fact. In such a system, if there is a sufficiently large group of miners / accounting nodes cooperating with each other to rewrite the history of the distributed ledger, the past payments may become invalid. This is simply not possible when the central bank is the ultimate guarantor. Once the payment is settled on the central bank's balance sheet, it is final. The only way to reverse such transactions is to perform a new, opposite transaction.

The third role of the central bank is to ensure the smooth operation of the payment system without congestion by providing sufficient liquidation liquidity. In times of stress, the central bank's role in providing liquidity is to act as a lender of last resort, and its role is even more pronounced. Compared to the cash balances maintained by individual system participants, the value of payments in today's high-value payment systems is high. If payments must wait for each other, it can easily cause congestion. If the central bank can issue loans directly to its wholesale accounts in the form of day-to-day overdrafts, it can help solve the problem of payment congestion. These overdrafts are sometimes substantial. In the years before the Global Financial Crisis (GFC), the Federal Reserve injected up to $ 180 billion into the financial system every day, accounting for about 5% of total daily payments. Day-to-day overdrafts have fallen after the GFC, but still reflect a much larger reserve balance (compared to before) maintained by commercial banks at the Fed. The general view is that settlement liquidity can only be met through central bank support, otherwise participants will need huge cash balances. In times of stress, the central bank's last lender role remains central to the security of the financial system.

The fourth role of the central bank is to oversee the payment system. By setting requirements and implementing those requirements, we ensure the security and efficiency of the payment system.

These four roles laid the foundation for a modern two-tier payment system. By performing these functions, the central bank has strengthened the public's trust in currency, which is a core public product for maintaining the financial system. After all, the monetary system is a critical public infrastructure that everyone depends on, and it should serve the public interest, not the interests of private stakeholders.

Monetary governance

Throughout history, private money has come and gone. Some currencies last longer than others. The key question has always been how to support the value of a particular form of currency. In private currency experiments, the starting point is always to support the value of the issued currency by linking assets and establishing "binding" rules for currency issuance. But history tells us that in the end, the lure of profit maximization began to erode the issuer's commitment to currency value, and currency value eventually succumbed to governance failure. BIS and ABN AMRO will publish a paper recently to analyze the reasons for the failure of the bank's monetary governance, taking the Bank of Amsterdam (1609-1820) as an example.

Bank of Amsterdam was established as a deposit and payment bank, which provides account-based currency to depositors. The merchant pays gold coins to the bank, and the bank issues deposits backed by these coins. These deposits, in turn, can be used to pay and settle financial claims.

In terms of the creation and management of account-based currencies, Bank of Amsterdam is very similar to the "stable currency". The value of deposits is maintained by asset backing. Therefore, account-based currencies can be used not only as account units and means of payment, but also as a store of value. For 170 years, the very successful Bank of Amsterdam has an absolutely secure balance sheet with liabilities almost entirely supported by metal inventories (see chart below, top pillar blue). The bank's good reputation has led the bank to deviate from its charter from time to time in providing liquidity assistance to market participants through overdrafts. However, in the late 1770s, it increased its lending to its largest client, the Dutch East India Company, further deviating from the charter. As its reputation fades, and the quality of its (reserve) support (see above, middle bar blue) fades away, public trust in its account-based currency also fades away. As a result, the run in 1795 caused the bank to collapse (see the bottom blue in the figure).

Figure: Bank of Amsterdam Balance Sheet (asset side) Source: BIS

The history of Bank of Amsterdam has resonated strongly in the current debate over stablecoins. The lesson is that good governance is essential. Governance is not only a provision of the Charter, but it must be strong enough to resist forces that could undermine the Charter. Even if a stablecoin is operated by a non-profit entity, its long-term sustainability is still limited by the credibility and scope of its governance arrangements, especially in terms of its asset support and reserve management. The G7 report led by Cœuré listed the legal and regulatory challenges brought by stablecoins, including legal clarity, sound governance, anti-money laundering / counter-terrorism financing / anti-mass weapons proliferation proliferation financing, market integrity Etc., counterparty risk and who will provide liquidity and assistance when needed are also key factors in the stability of stablecoins.

Ueli Maurer, the recently outgoing Swiss Federal President and Minister of Finance, said that Libra's current design "has no chance" because the central bank will not accept a plan to support the issuance of stablecoins and stabilize their value based on a basket of assets. The head of the Libra Association has stated in October 2019 that it will simplify its design-from linking a basket of assets to linking a single fiat currency. Correspondingly, Libra's reserve management mechanism may change from a management approach similar to that of money market funds to a simple fiat currency depositary model. This will help improve Libra's legal clarity, strengthen its governance, and reduce financial stability risks. In general, the returns on money market funds are significantly higher than bank deposits. Therefore, after Libra changed its reserve management mechanism, its profitability would be severely weakened. This may explain why the Libra Association recently revised the white paper to remove the description of “paying dividends to members of the Libra Association”.

Wholesale and retail CBDC

CBDC can be divided into wholesale CBDCs-where network participants are financial institutions that already have access to the central bank's balance sheet-and retail CBDCs, which are also available to general users such as businesses and consumers. For wholesale CBDCs, account-based CBDCs used by regulated financial institutions have long existed in the form of regular central bank deposits held by commercial banks—reserves. Therefore, wholesale CBDC is equivalent to tokenization of reserves. Tokenized wholesale CBDC is being developed for specific applications involving large payment systems, such as large securities transaction settlement. For example, Bank of Canada and the Monetary Authority of Singapore have tested the use of token-based CBDC in cross-border wholesale settlements. The private sector also proposes wholesale stablecoins, such as Morgan Coin and Utility Settlement Coin (USC).

For wholesale payments, settlement liquidity is particularly important. For large-value payment systems for real-time transactions, the payment value is large relative to the cash balance, and settlement liquidity is a key source of potential inefficiency. The central bank can provide overdrafts to payment system participants in order to obtain more immediate payments with lower prefunded liquidity. The CBDC token technology itself does not exclude settlement liquidity requirements, and the use of tokenized CBDC technology does not exclude the need for central banks to provide day overdrafts. However, the CBDC can be compatible with the supply of central bank settlement liquidity.

Since wholesale CBDCs will be mainly limited to institutions that currently use central bank deposits, wholesale CBDCs will not cause the thorny business footprint issues associated with widely available retail CBDCs and will have little impact on existing monetary policy.

BIS published a paper "Wholesale Digital Tokens" on December 12 discussing the role of digital tokens as a means to resolve wholesale transactions. China's central bank Mu Changchun participated in the work of the report. The author speculates that the People's Bank of China is conducting research and development on wholesale CBDC.

The introduction of retail CBDC will represent a radical change. When it comes to the availability of 24/7 payment availability, varying degrees of anonymity, point-to-point transfers, or the range of interest rates applicable to currencies, retail CBDC will open up many new possibilities. But they also create potentially negative externalities to liquidity, profitability, and bank intermediary behavior. Whether or not they serve as a new and independent currency instrument, they may bring potential financial stability risks (such as large-scale and / or sudden conversion of bank deposits to “runs” of the CBDC) and weaken existing monetary policy transmission mechanisms (Such as the central bank's inability to precisely control benchmark interest rates and liquidity supply). The author's article "Risk Prevention in the Practice of Central Bank's Legal Digital Currency" published in "Finance and Economics" in August 2019 discussed these issues in detail.

The issuance of retail CBDC will weaken the ability of commercial banks to "create money by issuing loans", which is crucial to understanding the central bank's position on retail CBDC.

Use a simplified model to examine the business model of a bank. According to regulatory requirements, all deposit liabilities of banks need to be supported by corresponding assets, and the asset requirements for different currency types of deposits are different. Physical cash requires 100% reserve (that is, a commercial bank's one yuan reserve in the central bank can only be exchanged for one yuan of physical cash). Considering the distribution, storage, and recovery costs of physical cash, and physical cash does not generate interest, commercial banks hold cash essentially It is a loss of money, so all commercial banks tend to hold the smallest amount of cash, just to meet user withdrawal needs. Partial reserves are required for general deposits. Assuming a reserve reserve ratio of 10%, a one yuan reserve of a commercial bank in the central bank can derive ten yuan of deposit currency. When the reserves of commercial banks in the central bank are insufficient, commercial banks can borrow their liquid assets from the central bank to borrow reserves from the central bank. Therefore, the size of a commercial bank's liquid assets restricts its ability to create deposit currency. Considering that commercial banks create deposit currency through loans, the scale of commercial banks' liquid assets restricts the scale of credit creation. Similar to physical cash, (retail) CBDC requires 100% reserve. Therefore, the switch from commercial bank deposits to CBDC actually forced the banks to convert equivalent-sized deposits from part of the reserve to 100% reserve, which would quickly consume the liquid assets held by the commercial banks, which would seriously affect The quantity and price of credit. Considering the currency multiplier, under normal circumstances, even if the bank runs out of liquid assets, it cannot support the conversion of user deposits to CBDC, and banks have to recover loan assets at a discount. Banks can quickly fall into insolvency.

Central Bank Payment Innovation

Improving current account-based systems

The most effective way to improve the retail payment system is to expand the current account-based two-tier system to accommodate faster payments. This will be based on a level playing field, providing space for traditional banks and innovative non-bank payment service providers (PSPs).

Central banks can promote competition by allowing new non-bank PSPs to access central bank settlement accounts. China, Britain and Switzerland have already done so. China's first third-party payment company was born in 1999. By the end of 2018, the central bank had issued about 270 third-party payment licenses. The Bank of England has adjusted its settlement account policy to allow non-bank access. In Switzerland, licensed Fintech companies are allowed to access the Swiss National Bank account. To ensure a level playing field and respect for the principle of proportionality, light supervision must be accompanied by a reduction in access to central bank services. For example, a slightly regulated PSP can only access central bank settlement accounts on a pre-financing basis. In other words, they are not eligible for overdrafts or other central bank liquidity assistance.

When big tech companies get involved in the payments business, new problems arise. Their business model relies on direct interaction between a large number of users through online platforms (social networks, e-commerce platforms, and search engines). An important by-product is a large amount of user data, which serves as an input to services that take advantage of natural network effects, thereby generating more user activity. Increased user activity completes this cycle as it generates more data. Because of this data-network-activity feedback loop, these large tech companies entering payment services have brought serious market power and data privacy issues.

The People's Bank of China recently adopted a two-tier system reform, requiring large technology companies to be fully integrated into the central bank's payment system. First, the reform requires the reserve ratio of large technology companies to be increased from 20% to 100%, and the reserve account to be collected from commercial banks to the central bank. The aim is to severely restrict large technology companies from investing these funds in interest-bearing assets in the banking system or restrict them from providing credit to customers through credit platforms and risking access to shadow banking. Second, large technology companies are required to settle payments through the newly created state-owned network-linked platform. The settlement through a public platform has improved transparency, replaced the complicated and opaque bilateral relationship between third-party payment platforms and banks, and provided a fair market competition environment for small and medium-sized third-party payment platforms.

US "Long Arm Jurisdiction" and Global Response in the International Payment System

In the US-based international payment system, SWIFT has become a weapon for the United States to wield a stick of sanctions and play with "long-arm jurisdiction", and even used to deal with US allies. Not only is it used to sanction unfriendly countries such as North Korea, Iran, and Russia, the United States has threatened to sanction European companies that still maintain trade relations with Iran by cutting off SWIFT connections.

Countries in Europe, including Britain, Germany and France, have started to establish an independent payment system with Iran-Europe-Iran settlement mechanism-to circumvent US sanctions on Iran and European companies that maintain trade relations with Iran. In early December 2019, Belgium, Denmark, Finland, Norway, the Netherlands and Switzerland announced their accession to the new settlement mechanism. China and Russia are also welcome to join.

China started construction as early as April 2012 and officially launched the RMB cross-border payment system in October 2015 to improve cross-border settlement efficiency and meet the needs of RMB business development in major time zones, improve transaction security, and build a fair Market competition environment, the People's Bank of China completed the second phase of the system in May 2018. Considering that the United States increasingly uses SWIFT as a daily tool for "long-arm jurisdiction", the Chinese government has spent nearly 8 years building a cross-border payment infrastructure that is completely independent of the US dollar payment system.

Concerns and Responses to European Payment System Autonomy

ECB Executive Board Benoît Cœuré expressed his concerns about the autonomy of the European payment system and the response measures of the European financial elite in his speech on "Retail Payments Towards Tomorrow: A European Strategy" in November 2019. The core of this strategy is a market-oriented pan-European retail payment solution.

Although Europe has made significant progress on single markets and currency unions, there is still a lack of European solutions for the retail payment market. This is due to the lack of a pan-European way of acting, fragmentation of the country, and (non-European) large tech companies to create separate new payment ecosystems to meet consumers' growing cross-border payment needs. At present, the knowledge, skills and infrastructure of the dominant payment systems in Europe belong to non-European companies-large global technology companies represented by Apple, Google, Facebook and Amazon.

Full reliance on non-European and new ecosystems can present two risks. First, the unverified nature of risks associated with global stablecoins. Second, it may undermine the autonomy and flexibility of the European payment system and not meet the needs of the European single market / single currency. Reliance on non-European global players makes the European payment market more vulnerable to external interference. Service providers with global market power are not necessarily in the best interests of European stakeholders. The monetary power of other countries will not proceed in the best interests of the European Union, or even be used against the European Union.

Cœuré believes that the only effective response to these risks is the joint effort of European banks to provide payment solutions that both reflect consumer demand and strengthen the single market. Therefore, the Council of the European Central Bank has decided to actively promote pan-European market initiatives for retail payments. The core of the retail payment strategy of the Euro system is a pan-European market-oriented payment solution.

The author believes that there are two challenges in implementing a retail payment strategy in Europe-the challenge of large global technology companies and the fragmentation of EU countries.

Europe has not been able to form a large domestic Internet company. Therefore, when large global technology companies bring a large user base and an ecosystem of diversified economic activities into the field of payment and broader financial services, Europe is almost unable to resist. Although a single European payment solution can provide consumers with a globally consistent payment experience and meet their needs for fast, low-cost, secure, and easy-to-use payments, compared with the DNA business model of large technology companies, they have little chance of winning. The key features of the DNA business model are Data Analytics, Network Externalities, and Interwove Activities. These three elements reinforce each other: network externalities bring more users and more value to users, which in turn allows large technology companies to generate more data, which helps to enhance existing services and attract more users. Compared with large technology companies, European banks (especially individual banks) have a much smaller customer base, the types of services (economic activities) they provide are limited to traditional financial services, and they lack big data and big data processing experience. Banks are far less effective than large tech companies in leveraging the feedback loop between data, network externalities, and tightly coupled activities. The competitiveness difference between banks and large technology companies in providing financial services is also reflected in the fact that the growth of the latter has already had a far-reaching impact on the industry organization of the financial services industry. The financial hierarchy is reversing, and banks are downgrading from the center of the traditional financial system to payment services that are provided by large technology companies. China's Ant Financial and Tencent have shown this feature.

The fragmentation of European countries may weaken the effectiveness of European retail payment strategies. This is reflected on two levels. First of all, the European stakeholders of the unified payment solution are the fragmented European banking industry. As a contrast to the payment solutions of large technology companies, there is a powerful network platform and an economic ecology behind it. Second, the single European market is actually very fragmented. Cœuré stated in a speech in the Digital Challenges Facing the International Monetary and Financial System in September 2019, "Despite the creation of a single currency 20 years ago, cross-border e-commerce in the Eurozone has not taken off. Domestic bias remains strong. Only One-third of European e-commerce shoppers buy from sellers in other EU countries. About 40% of European websites do not sell to consumers in other member states, and nearly 80% of online sales are domestic. " Cœuré continued, "It may be easier to connect a new currency (such as Libra) to an existing network than to build a new network on an existing currency (euro). Few retailers see the introduction of the euro as establishing a pan-European network around the euro Opportunity". With or without the euro, the single service market is still incomplete.

The author believes that in order to consolidate the autonomy of the European payment system, Europe's first task is to consolidate and expand the volume of trade calculations settled in Euros. In 2018, the United States and the European Union accounted for 10% and 11% of total global trade, respectively, but the global trade volume settled by the US dollar and the Euro was 50% and 30%, respectively. Europe contributes a considerable amount of dollar-denominated trade (even if both parties to the trade have no relationship with the United States). Former European Commission President Juncker has said that it is ridiculous that Europe imports 300 billion euros of energy each year, but has to pay 80% of its orders in US dollars. The status of any international currency is first measured by the total amount of trade it pays.

In order to consolidate the autonomy of the European payment system, Europe should resolutely develop the retail CBDC like the People's Bank of China to enhance the potential of RMB internationalization and resist the erosion of its currency sovereignty by a global stablecoin like Libra. However, in order to protect the interests of commercial banks, the European Central Bank chose to develop wholesale CBDC rather than retail CBDC. This will be discussed in detail later in this article.

Global keen domestic fast payment system

The rise of online transactions and cross-border transactions has spurred growing consumer demand for more convenient, fast, low-cost and secure cross-border payments. Traditionally, cross-border payments have been notoriously slow and expensive. The rise of Libra is primarily based on providing fast and low-cost cross-border payments. As the first step in tackling the Libra challenge, global central banks often choose to vigorously improve their domestic payment systems—significantly increasing speed and reducing costs to meet consumer needs. Therefore, we observe that in the bank-based two-tier payment system, the rapid retail payment system is gradually popularizing. Currently, 45 jurisdictions have fast payment systems, and it is expected to increase to 60 soon.

Innovators in this area include emerging economies and others who are not constrained by traditional technologies or resisted by vested interests. As the most typical payment innovator, China launched the second-generation modern payment system CNAPS in 2013, solving the problem of fast and low-cost domestic payments. China's mobile payment is also leading the world. Until December 2018, the ECB launched the Target Instant Payment Settlement (TIPS) system to support low-cost, real-time payment settlement in the euro area, but TIPS is only the back end of the European payment system. Europe still Lack of a unified payment front end. In some ways, the United States is one of the few advanced economies that has not universalized fast payments. Only this year, the Federal Reserve Board announced that the Federal Reserve's own fast payment system, FedNow, will be operational in 2023 or 2024.

US Private Digital Currency Regulatory Pattern and Rejection (Retail) CBDC

A speech by Michael Held, executive vice president of the New York Fed's legal group in early December 2019-"U.S. Regulations and Methods for Cryptocurrencies"-introduces the U.S. regulatory landscape for privately issued digital currencies, saying U.S. policymakers and regulators The agency has not yet developed a general framework for regulating private digital currencies. Although various federal regulators have shown a willingness to use existing monitoring tools for digital currencies, the effectiveness of the regulation depends partly on the functional use of digital currencies and partly on the basis of various legislators and regulators who have the power to monitor digital currencies. Priorities. The challenges here are that the boundaries of the digital currency's asset class (commodity, securities, or currency) are blurred; the state approaches risk inconsistent processing, and there may be a risk of "bottom-line racing" on licensing standards; federal banking regulators The permissibility of currency issuance, holding, and transfer activities remains largely silent. A Forbes article on December 19 states that the US Congress is drafting and discussing the 2020 Cryptocurrency Act. The preliminary review of the bill divides digital assets into three categories and categorizes the regulatory power of digital assets into three categories-cryptocurrency, crypto commodities. And crypto securities-respectively assigned to the Financial Crimes Enforcement Network, the Commodity Futures Trading Commission and the Securities and Exchange Commission. The design of the regulatory program lacks cross-sectoral coordination, and the Federal Reserve, as the most appropriate regulator, "shamefully" kept silent, which reflects the strong domestic regulatory lobbying power against the digital currency industry.

Fed Governor Lael Brainard spoke in October 2019 and re-emphasized the Fed's position on stablecoins and CBDC in December. Brainard said that the current US dollar system is convincing because: physical cash in circulation continues to rise; the US dollar is an important global reserve currency, and maintaining public trust in sovereign currencies is vital; the United States also has a strong banking system to meet Consumer demand; the Federal Reserve has widely offered and expanded a variety of digital payment options. Issuing (retail) CBDCs may also face legal issues such as the complex balance of protecting user privacy and cracking down on illegal activities. In contrast, the decision of the People's Bank of China to issue DC / EP is even more decisive-the controllable anonymous design of DC / EP's "anonymity at the front and real name at the background" essentially sacrifices the absolute anonymity of physical cash. Issuing a CBDC may help solve the problem of the zero interest rate floor, but the Fed tends to use existing monetary policy tools rather than introducing the CBDC to solve these problems. The issuance of a CBDC may also trigger risks to financial stability, such as the "run" of large-scale and / or sudden conversion of deposits to the CBDC, and the risk of commercial bank disintermediation. Issuing a CBDC may also bring operational risks, such as the need for the central bank to run hundreds of millions of accounts, or the existence of electronic counterfeiting and cyber risks. Therefore, Brainard concluded that the Fed will not issue a CBDC in the short term. In the author's opinion, the reasons stated by Director Brainard are mostly untenable except for financial stability. The most important reason she did not say is that the issuance of retail CBDC will weaken the commercial model of commercial banks.

In early December 2019, US Treasury Secretary Steven Mnuchin stated in Congress that it had reached a consensus with the Federal Reserve that the Federal Reserve did not need to issue a CBDC within five years, and did not oppose Libra's issue of digital currency. The author's October 2019 article "Libra of the US Dollar, the Future of the US Dollar" states that Wall Street is the "God of Destiny" that determines Libra's future. The various questions Libra faces in Congress are just "teapot storms". The Fed does not object to Libra because: (1) Libra's stablecoin issuance mechanism is based on the US dollar legal currency M2, which was not created by M0, thus protecting the interests of commercial banks. (2) The use of blockchain and smart contract technology by Libra not only allows the Fed to improve the efficiency and reduce the cost of payment and clearing infrastructure, but also greatly enhances the Fed's ability to control and control the currency system. The more the Chinese government likes blockchain, the more the Federal Reserve likes Libra. (3) Libra is now linked to a single fiat currency and a reserve management mechanism based on fiat currency depositary. It has not created a new accounting unit and maintained the currency authority of the US dollar. (4) The international monetary and financial system based on the US dollar is fundamentally vulnerable, and the US dollar is facing the predicament of widespread criticism. Libra has been successfully portrayed as a sad hero image of "challenge the dollar hegemony and suffer ruthless suppression". There is no more suitable shield than Libra. (5) Facebook has an active user base of one third of the world's population, with a potential global size and scope. So Libra is a payment and digital currency solution that rivals China's Alipay and WeChat Pay. (6) The Federal Reserve believes that the speed of user acceptance of digital technology may exceed the speed of acceptance of any technology in history. For example, it took 40 years for the phone to enter 80% of American households, 13 years for the Internet, less than 10 years for smartphones, and digital currency. Might be faster. (7) Libra's digital advantages may bring about the effect of "digital dollarization". An economy that is economically or socially open to the Facebook ecosystem, even if it has a sound currency system, is vulnerable to "digital dollarization." Therefore, for the Federal Reserve, there is no better offensive weapon than Libra, when currency is needed as a weapon.

As a global hegemonic currency, how could the US dollar be absent from the carnival of the digital age? An article by Zhu Min, dean of the National Institute of Finance in July 2019, has revealed Libra's hole card-"eventually linked to the US dollar, to become the official digital dollar issuer and operator." So the US dollar just changed its form to continue playing with everyone.

Eurozone wants to be the first to issue wholesale CBDC

Understanding the Eurozone's position at the CBDC requires an understanding of the EU and the Eurozone. The European Union is a political, economic, and monetary union formed under the concept of "European integration", and has achieved certain success in terms of single currency and single market. EU member states' diplomacy is the responsibility of the EU government-the European Council, the European Parliament, etc., and military affairs are the responsibility of NATO. The 27 member states of the European Union, 19 of which form a monetary union, are members of the euro zone. The European Central Bank is the sole decision maker in the euro zone ’s monetary policy. It has strong independence. This independence is built on the highest level of European law and surpasses all laws of member states. The government accepted the directive. Britain has left the EU, and France and Germany are EU leaders. The foundation of the European Union is the economic and monetary union that transcends sovereignty. It actually weakens the sovereignty of member states. This is an anti-state consciousness-transferring the power of a previously elected government to a group of unelected technical bureaucrats, especially Transfer of a country's monetary policy decision-making power to an unelected group of central bank technical bureaucrats in a legal form that goes beyond the constitutions of individual countries. The core of the European Central Bank's power, like the FED, BIS, and FSB, is a group of central bank technical bureaucrats, bankers, and scholars who represent "multinational capital groups that do not represent any sovereign country or nation." Their position may be similar to that of sovereignty. Officials of the national government are in opposite positions. Therefore, the voice of the ECB in the euro area monetary policy is decisive, and the voices of the EU government and the governments of the euro zone member states are not. The decision-making body of the ECB, the Management Committee, is composed of members of the Executive Committee and the governors of the central banks of member states, so the positions of the central banks of member states (independent of their governments) are consistent with the ECB.

After the release of the Libra white paper, the G7 rotating chairman of the French National Bank immediately appointed the ECB executive committee to lead the evaluation of the stablecoin and submitted the evaluation report to the G20 Finance Ministers and Governors Meeting four months later. The FSB Stablecoin Working Group continues to formulate recommendations on global regulatory policies for stablecoins-meaning making legal and regulatory preparations for the launch of stablecoins. ECB executive Benoît Cœuré said in an interview with Bloomberg in October 2019, "Global financial regulators have no plans to ban Facebook Libra or other stablecoins, but these digital currencies supported by official currencies must meet the highest regulatory standards. ". All this shows that the core of the ECB's power is not intended to prevent or oppose Libra, although the EU government or the governments of EU countries have strongly opposed Libra.

The French central bank governor François Villeroy de Galhau stated in early December 2019 that the issuance of the CBDC has three goals: (1) to ensure that all citizens have access to the central bank currency in countries where cash use is declining rapidly, such as Sweden. CBDC will help maintain trust in the financial system. (2) CBDC helps to improve efficiency, reduce intermediary costs and flexibility. These benefits may come from the "tokenization" of the central bank's currency, especially in settlement and post-trade activities. (3) The most important reason for political authorities, including France and Europe, is that the establishment of the CBDC will provide them with strong leverage to enable them to maintain sovereignty in the face of private sector initiatives such as Libra. He believes that "at least issuing wholesale CBDCs will have certain advantages, because we will be the first such issuer in the world, and therefore will gain the benefits of owning a benchmark CBDC." This is in line with the virtues of the French-do not miss any opportunity to play the role of world leader. The Bundesbank Executive Committee Johannes Beermann said that "the wholesale form is an improvement on the existing structure, but it has little or no impact on monetary policy", so issuing a wholesale CBDC is a harmless attempt.

Although it is eager to become "the first CBDC issuer in the world", the ECB remains vigilant about issuing retail CBDCs. François Villeroy de Galhau, Governor of the Bank of France, stated that "to check (retail) the potential negative externalities generated by the (retail) CBDC for liquidity, profitability and bank intermediary behavior", and Denis Beau, the first deputy governor of the Bank of France, said that "in the euro area The business case for promoting retail CBDC is a bit weak, "said Johannes Beermann, the Bundesbank executive committee." For the economic relationships between households, commercial banks and the central bank that have developed to date, the retail format may mean a paradigm shift. " The expression of "paradigm shift" is euphemistic and artistic. The subtext is that the issuance of retail CBDC destroys commercial banks' business model of "creating money by issuing loans."

Libra is aiming at solving the retail payment scenario. If issuing wholesale CBDC is considered as a means to combat Libra, it can only be a donkey's lips and a horse's mouth, but why is this happening?

Combining the ECB's attempt to issue wholesale CBDC and the so-called retail payment strategy in Europe mentioned above, this is only an expedient measure for European financial elites when facing the challenges brought by large global technology companies in cross-border payments and digital currency innovation-loss The position of (sovereign government) currency sovereignty and retail payment is still recovering a part of coinage from commercial banks to the "central bank" (government) to strengthen resistance to the erosion of sovereignty by other currencies. The European financial elite made a radically different choice from their Chinese counterparts (discussing China later), and there is a reason for this choice. The foundation of a supersovereign European Union was anti-state awareness and weakening of the sovereignty of member states. Behind European banks were a group of elites without state awareness. In the face of this challenge, the natural choice is to maintain the minting power in the hands of banks rather than to maintain the sovereignty of the country (currency) that has always been weak or even non-existent in their consciousness. This also explains the reason why senior ECB officials secretly gave Libra an attitude.

The reader may be surprised that the ECB will safeguard the power of bankers at the cost of currency sovereignty. In fact, this is not surprising. Richard Werner, the inventor of the Quantitative Easing (QE) concept and the author of the best-selling book Prince of Yen, predicted in 2003 that the European Central Bank would create asset price bubbles through continued large-scale quantitative easing operations. In order to create a recession, the euro zone countries were forced to transfer fiscal sovereignty to the European Central Bank in order to promote the establishment of a fiscal alliance and the process of European integration. Regardless of whether the book accurately judges the ECB's motivations, its predictions of its behavior are truthful. Once again, Benoît Cœuré, the European Central Bank ’s executive board member I ’m most familiar with, appeared in his speech on “Single Currency: The Unfinished Agenda” in early December 2019. The market, especially the service industry, promotes the effective allocation of resources and the establishment of capital market alliances; (2) building fiscal policies that are sustainable and promote growth. Countries with fiscal space should use it to promote investment. High-debt countries should adjust their policies to regain fiscal space in the future, thereby limiting the risks they pose to their neighbors. All countries can improve the quality of spending. (3) Strengthening effective regional toolkits — unified deposit insurance plans, common financial capabilities, and common security assets.

Eventually, when the monetary union seized the fiscal power of the member states, and the monetary union became a monetary and fiscal union, who would be the true head of the EU? Without monetary, fiscal, military, and diplomatic power, what else do member governments have? This is indeed a question of torture of the soul, and we will have more similar questions.

China vigorously develops DC / EP

On August 10, 2019, Director Mu Changchun of the People's Bank of China introduced the central bank's legal digital currency practice DC / EP: using a two-tier operating structure, that is, the central bank first exchanges CBDC for commercial banks or other operating institutions, and then these institutions exchange them for The public; at this stage, the CBDC is positioned as an electronic substitute for physical cash and belongs to M0, which is regarded as the central bank's liability; it mainly supports the retail payment scenario; the CBDC does not carry interest; the two-tier operating system will not change the existing currency placement system and binary The account structure does not compete with the deposit currency of commercial banks; the scheme does not affect the existing monetary policy transmission mechanism; the technical route developed by the CBDC is not preset.

Therefore, DC / EP has obvious characteristics of retail CBDC. Although the public cannot directly open an account with the central bank, the public can access the digital form of DC / EP issued by the central bank through a “two-tier operation structure”.

The People's Bank of China is also conducting intensive, cross-border clearing and settlement tests with banks, overseas financial institutions, and large enterprises with international operations, such as Huawei. From BIS's recent paper "Wholesale Digital Tokens", we can also glimpse the work of the People's Bank of China in wholesale CBDC. Therefore, we cautiously speculate that DC / EP also has the characteristics of wholesale CBDC.

The work of the People's Bank of China DC / EP started in 2014, but was announced at a high profile after the release of Facebook's Libra white paper in 2019 and was accelerated. A reasonable guess is that the People ’s Bank of China hopes to digitize the RMB to enhance its international competitiveness, so it started in 2014; the People ’s Bank of China sees Libra eroding the sovereignty of the RMB, so it hopes that DC / EP will maintain currency sovereignty internally, so it will accelerate in 2019 8 month. The People's Bank of China has always been silent on the specific launch date of DC / EP. Considering that on the one hand DC / EP as a new form of central bank currency requires more time to fully test to mitigate potential risks, on the other hand DC / EP assumes the responsibility of internally resisting Libra's erosion of RMB sovereignty, and the author is cautiously expected The launch date of DC / EP will be slightly ahead of Libra.

The previous analysis has shown that both the Federal Reserve and the European Central Bank are highly cautious about retailing CBDCs. Why can the Chinese central bank issue retail CBDCs? There are three reasons for this. First, the People's Bank of China represents the will of a sovereign government and truly reflects the public interest, so it is less affected by lobbying by vested interests in banks. Among the central banks of the world's major economies, the People's Bank of China may be the only one that can be called "in the public interest." Second, the design of the People ’s Bank of China DC / EP includes many considerations, such as double-tier operation, micropayments, non-replacement of bank deposits, restrictions on account grading “runs”, etc., imposes more restrictions to “castrate” retail CBDC Functions and slow down the impact on commercial banks, so DC / EP can win the support of commercial banks. Third, the People's Bank of China is cautious and pragmatic about digital innovation and risks. Before the advent of the digital wave, there were already many problems with the currency system. After the advent of the digital wave, new problems may be brought to the currency system. Whether to do or not to do, the old and new problems need to be solved, it is better to do it late, do less to do it early, and do long-term research, demonstration, experimentation and testing in order to mitigate the risks brought by digital innovation. The prudent and pragmatic attitude of the People's Bank of China is in stark contrast to the extremely political speculation of the French central bank. It is highly likely that the first central bank to issue a CBDC in the world will be the Central Bank of China.

In the final analysis, the fundamental reason for the People ’s Bank of China to be the first to issue retail CBDCs beyond the interests of the banking class is China ’s institutional advantage—the central bank truly represents the interests of sovereign governments and the public, rather than being controlled by a few capital groups.

Summary and deeper thinking

This article has examined the positions of the Federal Reserve, the European Central Bank and the People's Bank of China on the CBDC and payment system. There may be readers who still feel that the meaning is endless. If more central banks around the world, such as the United Kingdom, Canada, Australia, Japan, Switzerland, Singapore, and other central banks are not behind in digital innovation, should they be included in the discussion. My answer is not necessary. Basically, by understanding the mysteries of the monetary systems of the three largest economies of the day, we have learned almost all the secrets of the modern monetary and financial systems. The monetary systems of these three economies all show strong autonomy and unique characteristics, while the monetary systems of other economies are either the shadows of these three (for example, the United Kingdom to the United States) or the three satellites ( For example, Canada, Japan, and the United States), these three are already sufficiently representative in the discussion of limited space.

The rise of crypto assets, the entry of large technology companies into the field of financial services, and the rise of global stablecoin have all raised questions about the basic structure of the currency and payment system in their own way. In the face of these challenges, global central banks have made it clear that they need to address issues related to technological innovation and its impact on currencies and payments in a more proactive way. They must also ensure that innovation requires legal confirmation, sound governance, financial Stable and meeting high compliance standards without hindering beneficial innovation. Although global central banks have significantly different views on whether to develop CBDCs and what type of CBDCs, they have broad consensus on strengthening the nature of central bank currencies as a public product, strengthening monetary governance, and supporting innovative payment solutions.

The United States increasingly uses SWIFT as a weapon for long-arm jurisdiction, which has prompted Europe and China to vigorously develop their own payment infrastructure. Consumer demand for more convenient, fast, low-cost and secure cross-border payments has also prompted global central banks to accelerate the construction of fast and low-cost domestic payment systems. China is leading the way, Europe has started, and the United States is surprisingly lagging behind, reflecting the complex balance between innovation and vested interests.

The global central banks have consensus on the benefits of issuing CBDC: strengthen the central bank's public product status and maintain public confidence in the monetary system; improve the efficiency of payment and clearing infrastructure and reduce costs; strengthen the central bank's ability to control the monetary system. Wholesale CBDC is equivalent to the tokenization of traditional central bank reserves and has little impact on monetary policy. The retail CBDC will weaken the business model of commercial banks' "creating money by issuing loans", which is "a paradigm shift to the already established economic relationship between households, commercial banks and central banks."

The positions of major economies in issuing CBDC fully reflect the current differences in the status of various economies in the international monetary and financial system and the attributes of their central banks. The core powers of the Federal Reserve and the European Central Bank represent the interests of multinational capital groups, not the public interest. The US Federal Reserve ranks as the "Global Central Bank". The US dollar has global hegemonic status. There is no need to issue (retail) CBDC because it will damage the commercial model of commercial banks. By supporting Libra, the Federal Reserve can not only acquire strategic currency weapons equivalent to retail CBDC, but also hide its strategic intent. Therefore, it is an appropriate strategy for the Federal Reserve to not issue CBDC in the short term and support Facebook's Libra plan. Facing the challenges of non-European companies in payment innovation and digital currency, the European Central Bank chose to issue wholesale CBDCs rather than retail CBDCs, which reflects the European Central Bank's consideration of maintaining the commercial banks 'minting rights over the protection of European countries' currency sovereignty. This reflects the anti-state consciousness behind the super-sovereign European Central Bank. The rapid issuance of wholesale CBDC also reflects the extreme political speculative mentality of the European Union leader France. China's central bank's DC / EP started in 2014, and its initial motivation may stem from the long-term frustration of RMB internationalization; after Facebook announced Libra in 2019, DC / EP accelerated. Therefore, DC / EP assumes the responsibility to enhance the international competitiveness of RMB externally and maintain currency sovereignty internally. It has the characteristics of both wholesale and retail CBDC. The advantages of China's system ensure that the central bank can proceed from the public interest and not be subject to the lobbying and influence of less than interest groups.

The theme and content of this article touched on some fundamental issues in the modern monetary and financial system. For example, whose interest does the central bank represent, the public or a few multinational capital groups? Is the independence of the central bank reasonable? Who should hold the coinage right, a sovereign government (partly represented by the central bank) or a commercial bank? How does the origin of money affect the ownership of coinage rights? What will the future monetary and financial system look like? How to look at all the financial phenomena of the digital economy? Who leads the top order and institutional design of the international monetary and financial system, and what issues do they think about every day?

This article is not intended to discuss these more ambitious and profound issues, but fortunately, my new work-The Reality and Future of Digital Currency: Inheritance and Innovation from the Slate Economy to the Digital Economy-will comprehensively and deeply explore these The question, thanks to the predecessors of Zhu Jiaming, Yi Xiqun and Wang Wei, will be published by Dongfang Press.

Currency is a huge topic, involving technology, finance, economics, politics, law, history, philosophy and many other aspects. The author is a sparse learner, and the articles or works he writes are just for the purpose of inspiring everyone to study the currency issue in a scientific spirit.

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