The central bank talked about digital currency three times in 20 days.

The legal digital currency has recently appeared in official statements.

On August 21, the central bank's WeChat public account published two articles on digital currency. One was published in January 2018. Vice President Fan Yifei talked about the central bank's digital currency. Second, the deputy director of the central bank's payment and settlement division, Mu Changchun. On August 10th, at the China Finance 40th Yichun Forum, a speech on digital currency.

This is the legal digital currency "showing face" in the official statement at least for the fourth time this month. On August 2, the central bank said at the video conference in the second half of 2019 that it will accelerate the pace of research and development of legal digital currency; on August 10, Mu Changchun said at the China Finance 40-Yichun Forum, "Central Bank Digital Currency It can be said that it is ready to go out; On August 18th, the CPC Central Committee and the State Council issued opinions on supporting Shenzhen to build a pioneering demonstration zone for socialism with Chinese characteristics, and mentioned support for innovative applications such as digital currency research in Shenzhen.

The reporter noted that Shenzhen Financial Technology Co., Ltd., a company of the Central Bank Digital Currency Research Institute, has been recruiting and recruiting. In early August, it also hoisted information on recruiting blockchain R&D engineers and researchers.

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1 How does the central bank's digital currency operate?

Fan Yifei: Should adopt a two-tier operating system

Fan Yifei, deputy governor of the central bank, said in the article that the central bank's digital currency should adopt a two-tier operating system.

He said that the issuance of central bank digital currency by big countries is a complicated system project. China has a vast territory and a large population. The economic development, resource endowment and population education of different regions vary greatly. In the process of designing and operating the central bank digital currency, we must fully consider the diversity and complexity of system and system design.

"The single-tier operating system is that the People's Bank directly issues digital currency to the public. The People's Bank of China first converts digital currency to banks or other operating agencies, and then these institutions are redeemed to the public. This is a two-tier operating system." Changchun also explained the two-tier operating system in his speech.

The two-tier operating model of “Central Bank-Commercial Institutions” has many benefits. Fan Yifei analyzed that the model does not change the creditor-debtor relationship of the currency in circulation, does not change the existing money delivery system and the dual account structure, does not constitute competition for the commercial bank deposit currency, and does not increase the commercial bank's interbank borrowing market. Dependence will not affect the ability of commercial banks to lend, and will not lead to "financial disintermediation". At the same time, because it does not affect the existing monetary policy transmission mechanism, it will not strengthen the pro-cyclical effect under the pressure environment, and it can improve the convenience and security of payment, and it also has the credit advantage of the central bank endorsement.

Fan Yifei said that in order to maintain the central bank's digital currency attributes and achieve monetary policy and macro-prudential management objectives, China's central bank digital currency two-tier operating system should be different from the decentralized distribution model of various tokens. First, because the central bank's digital currency is still the central bank's debt to the public, its creditor-debt relationship has not changed with the currency pattern, so it must still ensure the central position of the central bank in the process of launching. Second, it is necessary to ensure and strengthen the macro-prudential and monetary policy control functions of the central bank. Third, do not change the dual account system and maintain the original monetary policy transmission. Fourth, in order to avoid operating agencies over-currency, there is a need for corresponding arrangements to achieve central bank tracking and supervision of digital currency delivery.

“However, the centralized operation mode mentioned here is different from the traditional electronic payment tools. The transfer of funds from electronic payment instruments must be done through the account, and the account is tightly coupled. The central bank’s digital currency should be based on the loose coupling of accounts. The degree of dependence on the account in the transaction link is greatly reduced.” Fan Yifei said that it can be as easy to circulate as cash, and can achieve controllable anonymity. Central bank digital currency holders can directly apply it to various scenarios, which is conducive to the circulation and internationalization of the RMB. In addition, personal information and privacy may be disclosed if there is no transaction third party anonymity; however, if full third party anonymity is allowed, it will contribute to crimes such as tax evasion, terrorist financing and money laundering. Therefore, in order to achieve a balance, it is necessary to achieve controllable anonymity, and only disclose the transaction data to the third party. Under the loosely coupled account system, operators can be required to asynchronously transmit transaction data to the central bank on a daily basis, which is convenient for the central bank to obtain the necessary data to ensure that regulatory objectives such as prudent management and anti-money laundering are realized, and that the system burden of commercial organizations can be alleviated.

Huang Zhen, director of the Institute of Financial Law at the Central University of Finance and Economics, said that the world knows that digital currency is the general trend. In fact, the People’s Bank of China began researching it five years ago, starting with digital currency, including the blockchain, to play a positive role in the digital economy.

2 How is the legal digital currency positioned?

Fan Yifei: At this stage, the central bank's digital currency design should focus on M0 replacement instead of M1 and M2 replacement.

Fan Yifei said in the above article that China's current central bank digital currency design should focus on M0 replacement instead of M1 and M2 replacement. This is because M1 and M2 have now been electronically and digitally implemented. Because it is based on the existing commercial bank account system, there is no need to digitize it with digital currency.

In another article issued by the central bank's official micro-publisher, the deputy director of the central bank's payment and settlement division, Mu Changchun, also said that the central bank's digital currency is a substitute for M0, so it does not pay interest on cash, and will not trigger financial disintermediation. Nor will it have a big impact on the existing real economy.

Prior to the launching ceremony and the first academic seminar of the Digital Finance Open Research Project held on July 8, Wang Xin, director of the Research Bureau of the People's Bank of China, revealed that the State Council has officially approved the research and development of the central bank's digital currency. Currently, the central bank is organizing market institutions to engage in corresponding work. .

Wang Xin said that the digitization of the central bank's currency will help optimize the central bank's monetary payment function and increase the central bank's monetary status and monetary policy effectiveness. The central bank's digital currency can become an interest-bearing asset that satisfies the holder's reserve demand for safe assets and can also become the lower limit of bank deposit interest rates. It can also be a new monetary policy tool. At the same time, the central bank can adjust the central bank's digital currency interest rate, affecting the bank deposit and loan interest rate, and help break the zero interest rate lower limit.

Chen Wen, deputy director of the Center for Inclusive Finance and Intelligent Finance at Southwestern University of Finance and Economics, believes that the central bank's digital currency should be considered as a supplement to the base currency.

3 Which city might “eat crabs first”?

CPC Central Committee and State Council: Supporting innovative applications such as digital currency research in Shenzhen

According to public information, the People's Bank of China has set up a special research team since 2014 to conduct in-depth research on digital currency issuance and business operation framework, key technologies of digital currency, distribution and circulation environment, and legal issues. In January 2017, the central bank officially established the Digital Currency Research Institute in Shenzhen; in September 2018, the institute established a trade finance blockchain platform.

Recently, in addition to repeated statements by the central bank, “supporting innovative applications such as digital currency research and mobile payment in Shenzhen” has also been included in the opinions of the CPC Central Committee and the State Council on supporting Shenzhen to build a pioneering demonstration zone for socialism with Chinese characteristics.

Chen Wen believes that as a pioneering demonstration area for building socialism with Chinese characteristics, the state has put forward requirements for building a pilot zone for digital economic innovation and development. On the one hand, the central bank's digital currency adopts a “two-level launch” system, clarifying the non-predetermined technical route, fully mobilizing market forces, achieving system optimization through competition, jointly developing and operating together, and Shenzhen has Tencent, Huawei, ZTE and other top Chinese companies. The technology-based enterprises, which have the largest number of blockchain innovation enterprises in China, have a strong competitive advantage in mobilizing market forces to explore digital currency technology routes. At the same time, the construction of the digital economy innovation and development pilot zone is also the practical application of the central bank's digital currency. It provides a wide space for imagination of the scene, which is conducive to continuously improve the design, delivery, tracking and supervision of the central bank's digital currency in the pilot application. Comprehensive comparison of the existing conditions of domestic mainstream first-tier cities, Shenzhen is most likely to become the first pilot city. Shenzhen may also make great progress in building a national and global financial technology center through digital money pilots.

Zhao Xijun, deputy dean of the School of Finance and Finance of Renmin University of China, said that it should be said that Shenzhen has developed many industries in the process of reform and opening up, and gathered a large number of high-tech enterprises such as Huawei in high-tech, Internet, communications and other fields to represent a new generation of research and development. The foundation of technology is at the same time the financial center, so in this sense, there is a foundation and a corresponding ability to carry out research and exploration combining finance and technology.

4 Is there a condition for issuing a legal digital currency?

Mu Changchun: At present, it belongs to a horse racing state, which is the process of market competition selection.

According to the inquiry of the national knowledge product patent system, as of August 21, 2019, the Central Bank Digital Money Research Institute applied for a total of 74 patents for designing digital currency.

A number of experts told reporters that the central bank's research in the field of digital currency is very fast, and currently there are technical conditions.

Huang Zhen said that in fact, the idea of ​​the central bank issuing digital currency has already been deployed and established the Digital Money Institute when Zhou Xiaochuan was the central bank governor, which has basic conditions.

Huang Zhen said that the technology of China's blockchain enterprises should be said to have certain advantages in the world. One is the number of patent applications and the world's leading technology. At the same time, there are many projects in the blockchain. For example, based on the application of the billchain in the financial field, the advantages of China's blockchain technology and the backwardness of the system are in sharp contrast.

Mu Changchun said, "At present, it belongs to a horse racing state. Several designated operators adopt different technical routes to do DC/EP research and development. Whose route is good, who will eventually be accepted by the people and accepted by the market, who will win? Competition. So this is the process of market competition."

In view of the difficulty of the current central bank issuing legal digital currency, Wu Changhai, deputy dean of the Capital and Finance Research Institute of China University of Political Science and Law, said that the current three major challenges are to issue digital renminbi: one is technical problems, and the other is that renminbi capital cannot flow freely. The third is to use digital currency to commit crimes.

Recent statements on digital currencies

August 2

The central bank said at the video conference in the second half of 2019 that it will accelerate the pace of research and development of legal digital currency.

August 10

Mu Changchun, deputy director of the central bank's payment and settlement department, said at the Yichun Forum of China's financial 40 people that "the central bank's digital currency can be said to be ready."

August 18

The CPC Central Committee and the State Council issued opinions on supporting Shenzhen to build a pioneering demonstration zone for socialism with Chinese characteristics, and mentioned support for innovative applications such as digital currency research in Shenzhen.

August 21

The central bank official micro-published two articles on digital currency. First, Fan Yifei, deputy governor, published in January 2018, talked about the central bank's digital currency. Second, the deputy director of the payment and settlement division, Mu Changchun, was in Yichun on August 10. Speech.

Beijing News reporter Zhang Yixin Cheng Weimiao Chen Peng

Article source: Beijing News

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