The digital sovereign currency is gradually approaching, and China has already prepared for it.

Facebook released the "Libra" cryptocurrency program to detonate a large-scale discussion around the world, especially the high-level leadership of China and the United States, making people full of expectations for national sovereign currency.

On the evening of July 11, Trump sent out three tweets to express his views on cryptocurrency. He called himself "not a fan of cryptocurrencies." He believes that Facebook's cryptocurrency Libra is "not reliable." If Facebook and other companies want to be a bank, they must comply with all banking regulations like other banks. He also said that "only the dollar is the real currency."

Trump’s tweet was immediately ridiculed, but people valued his position as the president of the United States on the digital currency. Coinbase CEO Brian Armstrong said: "He has always dreamed that the US president can express his views on the growing cryptocurrency in recent years." Now this dream has finally come true.

The high-level central bank of China disclosed the news that the State Council has approved the central bank's digital currency research and development, which has aroused the attention of the same industry at home and abroad.

On July 8, at the launching ceremony of the Digital Finance Open Research Program and the first academic seminar, Wang Xin, director of the Research Bureau of the People's Bank of China, revealed that the State Council has formally approved the central bank's digital currency research and development. The corresponding research and development work is organized by the Central Bank's Monetary Fund Bureau. Currently, the central bank is gathering market forces to actively promote it.

The national sovereign currency is gradually approaching, and not only the top leaders of various countries have begun to pay close attention, but many countries have also begun research on the central bank's digital currency.

China frequently speaks

China’s attitude towards digital currencies has always been relatively low-key. In the past few days, China’s top leaders have changed from the past to the past. Mu Changchun, deputy director of the Department of Payment and Settlement of the People's Bank of China, Wang Xin, director of the Research Bureau of the People's Bank of China and the Monetary and Financial Bureau, former president of the Bank of China, head of the blockchain working group of the China Internet Finance Association, and research on digital financial assets of Tsinghua Economics and Management Li Lihui, the center's advisory committee, Zhou Xuedong, director of the General Office of the People's Bank of China, and Zhou Xuedong, former president of the People's Bank of China and Zhou Xiaochuan, president of the China Finance Association, have all expressed their views on Libra and the digital currency.

On July 6, at the Renmin University of China, the former president of the Bank of China, the head of the China Internet Finance Association blockchain working group, and the advisory committee member of the Tsinghua Economics Digital Financial Assets Research Center said that in the process of digitization of the financial industry, people The most complicated thing to feel is the digital currency. Digital currency can be divided into legal digital currency, virtual currency, and trusted institution digital currency. At the same time, he suggested that China must accelerate the construction of the digital financial system and master the dominance of digital technology.

On July 8, at the "Digital Financial Open Research Program Launching Ceremony and the First Academic Symposium" held by Peking University, Huang Yiping, director of the Digital Finance Research Center of Peking University, pointed out that the overall judgment is that Libra is really difficult to land in the short term. Wang Xin said that Libra may have great development prospects in the field of payment, especially in the field of cross-border payment. As it develops, it may play more monetary functions, which is a monetary policy, financial stability, and even The international monetary system can have a major impact.

On July 8, the deputy director of the central bank's payment and settlement division, Mu Changchun, said that Libra created a convertible digital currency that flows freely across borders. The emergence and development of such stable currencies, whether from the implementation of monetary policy or macro-prudential management, are inseparable from the support and supervision of the central bank, as well as the regulatory cooperation between central banks and international organizations.

On July 12, the People's Bank of China held a press conference on financial statistics in the first half of 2019. Zhou Xuedong, director of the General Office of the People's Bank of China and spokesman of the People's Bank of China, responded to a reporter's question. "After Facebook issued the Libra coin, the Central Bank of China Things are also very concerned, and some discussions about the market are also concerned. They are also studying some of the impacts that Facebook will have on the financial system after the issuance of Libra. In short, we are also very concerned and there are some studies."

Zhou Xiaochuan, former president of the People's Bank of China and president of the China Finance Association, talked about this topic on different occasions in the past week. On July 9th, at the seminar on "China's Foreign Exchange Management Reform and Development", Zhou Xiaochuan said, "There may be a more international and global currency in the future. This is a strong currency, leading to major currencies. It has a relationship with it. This thing is not necessarily Libra, but from the trend of recent years, there will be many institutions and people trying to establish a currency that is more conducive to globalization."

At the seminar on "China's Foreign Exchange Management Reform and Development" jointly organized by the Foreign Exchange Research Center of the State Administration of Foreign Exchange and the China Finance 40 Forum, the People's Bank of China began to say three years ago that if it engages in cryptocurrency, Should refer to Hong Kong's experience, the issuing mode can be the central bank to issue money, or can be issued by commercial institutions."

Zhou Xiaochuan suggested that the study of cryptocurrency and currency globalization should be early. It can learn from the Hong Kong “currency bureau” Hong Kong dollar issuance system and require 100% guarantee for the issuer of digital currency.

Domestic and foreign media are highly concerned

Wang Xin, director of the Research Bureau of the People's Bank of China and head of the currency management bureau, revealed that the State Council approved the research and development of the central bank's digital currency, which has received great attention from domestic and foreign media.

CCN published an article entitled "Challenging the Challenge, China Will Not Be Indifferent", which states that the so-called "decentralization" of Libra supporters is actually a power from the central bank of developing countries to the central bank of multinational corporations and the largest economy. Kind of transfer. In response to the challenges of Facebook Libra, China is accelerating research on the central bank's digital currency.

Cryptoslate published an article labeled "The central bank's digital currency can help China better manage the economy," stating, "Now, Libra, which has 2.4 billion monthly users and its cryptocurrency project, Libra has another challenge for China. After approval, the People's Bank of China is working with market institutions to develop the central bank's digital currency to meet Libra's challenges. A central bank digital currency similar to Libra can help China better manage its economy.

Bitcoinist published an article titled "China may soon no longer have to worry about Libra," and the article's regulatory perspective. "China may not have to worry about Libra soon, because other national regulators are blocking Libra's further development. This month Facebook will talk to the US government about Libra, and some US lawmakers ask Facebook to stop all Libra R&D activities."

ZyCrypto published an article entitled "China is ready for the digital currency arms race", saying that "Libra will not pose a huge threat to Bitcoin and other cryptocurrencies due to its obvious centralization, but it has raised the government's height. Concerns, such as US regulators, require Facebook to suspend Libra's R&D."

"China has not done so, which has made the United States a cheaper part. China is well aware of this, so it plans to develop its own digital currency project to embrace the digital currency arms race."

China's Xinhua News Agency also issued a document that if the Chinese central bank wants to issue sovereign digital currency, the key point is whether to allow large enterprises and individuals to open accounts in the central bank system, and give storage interest. As a result, the central bank can better regulate monetary policy and set benchmark rates. Once the potential of the digital currency is released, it may have an impact on the secondary system such as “central bank – commercial bank”. The central bank’s monetary policy will directly affect enterprises and individuals, and the commercial bank’s currency multiplier factor will disappear. The banking system will also be reduced to an investment financial institution or a commercial lending institution. Such changes will occur sooner or later and are therefore topics that require close attention and research.

Financial writer Xiao Lei said that the digital currency issued by the central bank is, in a way, a monetary form that is more central and more conducive to the effective implementation of monetary policy. According to my thinking, the overall interest rate of the human currency market will continue in the future. Lowering the negative interest rate is a big trend. The implementation of the central bank's digital currency is actually easier to implement ultra-low interest rates and reach negative interest rates. This may help the country to adjust the economy, but for ordinary depositors, the credit of the legal currency may be further reduced. .

Multinational central banks intend to develop digital currency

In essence, central banks in many countries now have plans to issue their own central bank digital currency. Earlier this year, a report issued by the Bank for International Settlements also showed that 70% of the central banks participating in the survey were participating (or will be involved) in the work or research of issuing CBDCs.

Venezuela issued its own legal digital currency, the oil coin, in 2018. Venezuela is at the forefront of the world in issuing statutory digital currencies, not because of their technological advancement, but because of the urgency of fighting inflation and the US blockade. Therefore, its petroleum currency is in the form of an encrypted digital currency and claims to be mortgaged with 1 barrel of crude oil.

On July 9, the Turkish government added the relevant content of the central bank's issuance of digital currency in its economic roadmap from 2019 to 2023. The 11th development plan proposed by the Turkish President shows that “the digital central bank currency based on blockchain will be implemented”. In February of this year, Mohamed Simsek, an economist and then deputy prime minister, said in an interview with the media: "We plan to start our own digital currency work. We attach great importance to digitalization."

Russian central bank governor Nabiulina said in June that the Russian central bank will one day launch its own digital currency. She believes that the key to CBDC's utility is that technology must ensure "reliability and continuity"; technology must mature, including distributed registry technology.

Sweden plans to test its national cryptocurrency, the electronic krona e-Krona, in 2019. The reason for the issuance of electronic krona in Sweden is that the proportion of cash used in transactions is very low, so support depends on the private financial sector. It can be seen that the purpose of issuing legal digital currency in Sweden is to reduce dependence on the private financial sector and enhance the reliability of the domestic payment system.

Iranian media revealed on July 10 that the Iranian central bank governor announced that the Iranian authorities plan to authorize cryptocurrency mining. According to reports, the Iranian government has approved part of an administrative law that will authorize the exploitation of cryptocurrencies in Iran. Prior to this, Iran had a long discussion of the legal status of cryptocurrencies.

In addition, Uruguay has launched the CBDC pilot project, while the Bahamas, the Eastern Caribbean Monetary Union, Sweden and Ukraine are about to test their systems.

There are also small central banks (such as the Marshall Islands) that have issued central bank digital currencies in order to establish their legal tender status. In contrast, larger economies are slower in developing central bank digital currencies because demand is not urgent.

It is reported that the International Monetary Fund (IMF) is also exploring the possibility of issuing global digital currency in the future. At the recent Bank of England forum, IMF Managing Director Lagarde hinted that the organization intends to launch a bitcoin-like global digital currency, IMF Coin, based on the Special Drawing Rights (SDR) mechanism, to replace the existing world reserve currency.

It can be said that the issuance of digital sovereign currency by the state is the general trend.

China has long been planning for the rain

China wants to issue central bank digital currency, and the world is in vain. In fact, China has long been proactive in developing the number of central banks.

Wang Xin’s statement is also the second time this year that the central bank has publicly promoted digital currency research and development. In February of this year, Fan Yifei, deputy governor of the central bank, said that he would steadily push forward the research and development of the central bank's digital currency and strengthen the monitoring and disposal of virtual currency. However, it has not caught the attention of the media. Now, with the release of “Libra” by Facebook, digital sovereign currency has become more sensitive.

In fact, as early as 2014, the People's Bank of China has set up a special research team 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. However, the news of the establishment of the research team was announced in January 2016, when the central bank said that it would strive to launch the digital currency issued by the central bank as soon as possible.

When the central bank announced the establishment of a dedicated digital currency research team, it said that "issuing digital currency can reduce the high cost of traditional banknote issuance and circulation, enhance the convenience and transparency of economic trading activities, and reduce illegal and criminal activities such as money laundering and tax evasion. The central bank’s control over money supply and currency circulation."

In 2015, the central bank began to conduct research on some key issues in the field of digital currency and formed a series of research reports;

In 2017, the number of patents in the annual blockchain of the three units of the Digital Money Research Institute, the Institute of Printing Science and Technology and the China Banknote Credit Card Industry Development Co., Ltd. reached 68, ranking first in the world.

In September 2018, the People's Bank of China Digital Currency Research Institute established Shenzhen Financial Technology Co., Ltd. in Shenzhen. People close to the project said the company was involved in the development of projects such as the trade finance blockchain. The company was founded on June 15 this year, with a small registered capital of only 2 million yuan. The business scope includes: financial technology related technology development, technical consultation, technology transfer, technical services; financial technology related system construction and operation and maintenance.

In just a few years, the Central Bank Digital Money Research Institute built a trade finance blockchain platform and published a series of blockchain patents and reports.

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

He said that the next step is to explore digital finance to better support the development of the real economy. At present, digital finance business and product homogenization are serious. We should develop diversified and comprehensive financial services to meet the multi-level and diversified financial needs of the real economy. It is necessary to study how digital inclusive finance can be done in detail; how to promote cooperation between small and medium-sized financial institutions and big banks and technology giants in the field of financial technology.

I believe that China's research in the field of digital currency will never fall behind, only waiting for the time to mature.

文 | 内参君

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