Xiao Lei: China’s official overall statement, not to push digital currency, but I have a suggestion

In fact, the reason is very simple. Libra's ultimate goal is not to send a fund, nor to make you make money, but to use the credit of current legal and government bonds to issue a tool that can be distributed. The potential users of this tool are billions of end users distributed around the world. Therefore, from the strategic goal, libra is enough to challenge the existing international monetary system and the operating mode of the legal currency.

Libra's release is based on the current historical background. One is that the role of the US dollar in the international currency market is increasing, but most countries and markets use the US dollar as the international common currency, out of frustration and new international The demand for money forms is growing stronger.

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The second is the birth of Bitcoin, which provides a credible technical implementation of decentralized currency. Therefore, Libra's powerful point is to combine all these elements together. In order to gain more trust from the dollar users in the early stage, it will be issued directly with a basket of currencies, and users will not worry about the price difference.

Therefore, in fact, the central banks and the entire global financial market are not concerned about libra itself, but a new era opened by libra. This is like the global military field. Which country has invented any tank cannons or even aircraft carriers. In fact, not many countries will pay special attention to it, but if any country says that it has started the test of nuclear bombs, countries may not be able to sit still.

So no one in the sovereign countries to issue their own currency, no one cares, even though these countries issue much more money than libra (the initial size may be around $1 billion), but countries have to care about libra because libra comes for the global monetary system. Said that it is not an aircraft cannon, but a uranium enrichment.

Since the release of the Libra white paper on June 18th, the Chinese government has not expressed its position, but after a period of research and observation, gradually began to release the view of Libra from the relevant responsible person.

On July 8, the deputy director of the central bank's payment and settlement division, Mu Changchun, wrote about Libra. He believed that Libra created a cross-border free-flowing convertible digital currency. The emergence and development of such stable currency, whether from monetary policy or not The implementation of the macro or prudent management is inseparable from the support and supervision of the central bank, as well as the regulatory cooperation between central banks and international organizations.

On the same day, Wang Xin, director of the Research Bureau of the People's Bank of China, said that if libra might have a relatively large development in the field of payment, especially in the cross-border payment field, then if it is widely used, will it be able to play more money? The function of this issue is worth studying.

Wang Xin also said that the direct issuance of digital currency by the central bank will help to improve the effectiveness of monetary policy. In the future, the central bank's digital currency research and development, the central bank's digital currency (CBDC) advantage, can become an interest-bearing asset to satisfy the holder's safety. The reserve demand for assets can also be the lower limit of bank deposit interest rates.

From Mu Changchun's point of view, it can be seen that the Chinese central bank's interpretation of libra is actually considered to be a convertible digital currency that can flow freely across borders. The regulation of libra requires international cooperation.

The viewpoint of the research institute Wang Xin actually represents a kind of thinking on the actual operation level in the future. Libra may have a reference for the future implementation of the digital currency by the Chinese central bank. In fact, the main concern is that “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”.

The central bank’s thinking on digital currency is more comprehensive. In April last year, Sun Guofeng, director of the Central Bank Research Institute, specially published a paper on the role of digital currency in implementing “negative interest rates”. At that time, it was proposed that with the development of technology, the central bank The issuance of digital currency is the trend of the times. The central bank can set the interest rate of digital currency to a negative value when needed. Therefore, the replacement of cash by digital currency in the future will solve the problem of restricting residents' cash withdrawal to negative interest rate policy.

"On the other hand, in order to push the deposit interest rate to break the zero limit, the central bank needs to set the policy interest rate, that is, the interest rate of certain assets of the central bank, to be negative, and the cash rate as the central bank's debt is zero, which will lead to the central bank. The asset interest rate is lower than the debt interest rate and there is a loss. Therefore, a strong negative interest rate policy requires the central bank to issue a central bank digital currency (CBDC) to replace cash and set the interest rate of the central bank's digital currency to a negative value."

If last year's research papers were only provided by the research institute to the central bank's decision-making level, or even the State Council's internal reference report, then this year's libra stimulus will likely promote the accelerated launch of the Chinese central bank's digital currency.

But the digital currency of the People's Bank of China is essentially different from the digital currency such as Bitcoin, and it is also very different from the digital currency such as libra for global liquidity and payment scenarios.

According to the paper mentioned, considering that the financial crisis is not once in a life time, when the global deflationary recession occurs again in the future, the negative interest rate policy that breaks the zero limit of the deposit interest rate may become an important countermeasure.

In other words, 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 to decrease until the future. 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 French currency may be further reduced.

I personally feel that in this context, if the Chinese central bank wants to push the digital currency, it needs a stronger endorsement of trust, either our own economic military strength or a huge amount of gold reserves, otherwise it will face a major policy problem because The effectiveness of capital control issues in the digital currency era will be greatly reduced.

When Libra and others began to circulate, just as information technology would break through the news blockade of various countries, the Internet would bring a dead-end transmission of global information. Digital currency itself is also a kind of information flow, so the control of digital currency, the actual More on the need to improve their own credit level, the existing measures to manage the currency may become unable to do so.

If it is strategically to establish a digital currency suitable for internationalization, the digital currency with Chinese characteristics cannot be simply a technical upgrade. The process of digitizing the legal currency requires at least three characteristics:

The first is to have international currency attributes, similar to the current offshore market of the RMB, etc., which can be directly issued overseas;

The second is to have enough application scenarios, at least with the help of Chinese Internet giants, or other financial business networks;

The third is to have real asset endorsements, such as gold.

These three conditions are indispensable. Otherwise, the digital currency of the central bank is the digitization of the legal currency. On the contrary, because of the more centralized and further loss of scarcity after digitization, the trust of the French currency has further declined.

Another news is that China has continuously increased its holdings of gold in the past seven months, and its monthly holdings of gold have exceeded 10 tons on average, which means that each month's holdings are around 500 million US dollars. At present, the central bank's gold reserves have exceeded 1,900 tons.

But here we need to figure out a problem. The US dollar is still a unique world currency. As long as China holds the US dollar, it is actually much more efficient in the international market than the settlement of gold. Why should we increase its holdings of gold? Moreover, China holds Some gold reserves have never been used so far, and they have only increased or not. What is the use of gold in the end?

I think the central bank has not completely thought about this issue because the increase in holding gold reserves is only in order to spread the risk of US dollar foreign exchange reserves in the previous logical framework. In the event of an emergency, it will make up for the international balance that the US dollar foreign exchange reserves cannot reach. Pay and pay off demand.

The problem is, for example, the 1997 Southeast Asian financial and currency crisis, such as South Korea, the story of “donating money to save the country” is mainly due to the lack of foreign exchange reserves in South Korea and the need to use gold to pay foreign debt. China currently has two conditions, which is enough to show that China's gold reserves are too small and useless.

The first is that China's US dollar foreign exchange reserves are relatively abundant, and it is the world's number one. If the $3 trillion of foreign exchange reserves are unable to withstand the crisis, what role can a gold reserve worth less than $90 billion play?

The second is that China has very strict foreign exchange controls. The exchange rate fluctuations are not very large. Moreover, the pool of RMB is now 200 trillion. Can a little gold reserve be a credit endorsement for the RMB?

Therefore, under such a background, the strategic purpose of China’s increase in holding gold reserves, I think there are only two left, one is to prepare for the gradual liberalization of capital controls, as an emergency supplement and bottom line support for international capital flows. It is equivalent to doing a little hedging operation for the huge amount of US dollar foreign exchange reserves. The other is to link gold to the RMB at a certain stage (when the gold reserves are sufficient), and complete the international operation, similar to the promotion of the gold standard. French currency international credit.

But I have already said that because the pool of RMB is too big, the credit endorsement that 1900 tons of gold can play at this stage is very ineffective. We must know that more than half a century ago, the US economy and the dollar were much lower than the current China. When the US dollar used the gold exchange rate to defeat the pound, the US gold reserve was 22,000 tons, which is now China’s gold reserve. 11 times.

Therefore, there seems to be a lot of blindness in order to use gold to complete the key step of RMB internationalization. If you can't increase your holdings to 20,000 tons, you must endorse the renminbi credit. At least the amount of China's gold reserves will exceed 8,000 tons in the US, and according to the current rate of increase of the People's Bank of China, with the US 6,000 tons of gold. The difference in reserves needs to be compensated for more than 50 years (currently holding about 120 tons per year).

Prior to this, the gold reserve can only "hibernate" in the vault, unless it is sold at a price increase, and the profit operation is done, but the problem is that the central bank will not do this.

Since there are more than 1,900 tons of gold lying in the central bank's vault, there is no practical use at this stage, then you need to find a way to reduce the cost of holding, or increase the efficiency of utilization.

At this time, a historic scene took place, bitcoin and blockchain technology emerged, and Libra appeared.

Libra is only using blockchain technology, and behind it is based on a basket of currencies and government bonds. If China is based on gold reserves and RMB, and then cooperate with blockchain technology to complete a Chinese-style world currency issue, it may reach The effect of a double-edged sword.

Assuming that the central bank is not convenient to operate, this authority can be delegated to commercial banks, because Chinese commercial banks currently hold more than 1,000 tons of gold, and then acquiesce to commercial banks to cooperate with Internet giants to issue "libra" belonging to China.

I still remember the 2017 Spring Festival, Tencent and the Industrial and Commercial Bank of China, launched the "golden red envelope" products, the product has been launched quickly became popular on the WeChat network, less than two days, users rushed to millions, Ma Huateng It is strongly supported and promoted. But in the end, the traditional interests of the gold market slammed and rumors that the regulator had to stop it.

The golden red envelope that was received by Ma Huateng <br /> The rapid popularity of Tencent’s “golden red envelope” actually illustrates the problem that the market’s demand for such monetary assets is not necessarily based on the demand for currency stability. It is a demand for consensus, so the use of gold and blockchain technology as a digital currency for double credit endorsements is a natural and more universal consensus.

Therefore, China has its disadvantages in issuing digital currency, but it also has its advantages. Libra's model cannot be imitated because Libra relies on two borderless resources, one is Facebook's client and the other is the free flow of US dollars. .

But China can lift gold out, because in the international credit market, only gold credit can compete with the dollar, and the United States can no longer play gold, because it is equivalent to self-denying.

In recent decades, in order to reduce the currency of gold at the level of the international monetary system, the entire international financial and monetary education and selection system has been de-golden, and all of them are deeply embedded in the "gold useless theory". The US dollar and the US Treasury system are similar to the libra model of confrontation and continued competition. The best way for China is to make full use of the deep-rooted consensus of gold.

Just now, Zhou Xiaochuan, the former head of the People’s Bank of China, who has great influence in China’s financial and monetary system, has also expressed his views. Zhou Xiaochuan said, “There may be a more international and global currency in the future. It is a kind of currency. A strong currency leads to a major currency and its exchange relationship. 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." Zhou Xiaochuan suggested that the study of such trends should be early, and can also learn from the Hong Kong "currency bureau" Hong Kong dollar issuance system, requiring 100% guarantee for the issuer of digital currency.

Zhou Xiaochuan and the current central bank governor Yi Gang <br /> In fact, whether it is libra or Hong Kong dollar, or 100% guarantee system, it is actually a credit endorsement problem. Behind the Hong Kong dollar and libra, the core is still the US dollar, so if China wants to continue to use the US dollar Thinking to solve the problem, in fact, owning 3 trillion US dollars of foreign exchange reserves, including 1 trillion US dollars of US Treasury bonds, I believe that based on this, to issue a stable currency, I am afraid that in addition to the Federal Reserve and the US Treasury, there is no world. Any country or organization can match, but the problem is that if you do this, it is equivalent to embracing and supporting the dollar system, and you may never be able to jump out.

As Zhou Xiaochuan said, Libra is valued in a way that is inseparable from the global dollarization trend. Under the influence of a strong currency, the capital of a weak currency country may flow to a strong currency area to find a safe haven. At this stage, the world's strong currency is mainly the US dollar, and the process of dollarization has been going on. Some extreme examples, such as a country in Africa, have abolished the local currency and instead used the US dollar as a currency. We have observed a relatively significant dollarization trend in Central and Eastern Europe, Central Asia and other regions.

Judging from the international competition, even in Europe, such a strong ally with the United States, the United States is also struggling against the US dollar hegemony, trying every means to combat the European financial system, and the living space of the euro, let alone the Chinese economy and the renminbi. It is.

In competition with the US dollar, the RMB itself is not the best game tool. China needs to return to the essence of credit, using blockchain technology and an increasingly consensus digital currency concept to resurrect the real king gold in the money market. Otherwise, this Competition will still face the risk of being bullied by the United States. (Xiao Lei sees the city)

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