Text丨Wu Zhifeng (Special Researcher of the Institute of International Monetary Research, Renmin University of China)
Jack Ma delivered a speech at the Bund Financial Summit yesterday (October 24), which triggered a strong response. There is a long paragraph when it comes to digital currency. He said that digital currency is far from reaching the standard. Is he right?
Regarding the central bank’s digital currency CBDC, China is ahead of the world. The People’s Bank of China established the Digital Currency Research Institute in 2014 and began to systematically study digital currencies. Now it has piloted M0-based digital currency DCEP in cities such as Suzhou and Shenzhen. Recently, the central bank’s website has launched a draft revision of the People’s Bank of China Law for comments. , It is expected that after a few more rounds of trials, the digital legal currency DCEP will be officially issued.
According to a survey issued by the Bank for International Settlements, currently about 70% of central banks in the world are studying the concept of CBDC, but only 15% seriously consider issuing any form of CBDC in the next few years, while 75% of central banks may not be able to issue due to legal restrictions CBDC.
A recent powerful document “Central Bank Digital Currency and Monetary Policy” shows that central banks have very different views on what CBDC should be. The focus is on the following three criteria: availability (ie, whether it is for financial institutions or Issuance by the general public); technology (based on account or token); whether interest accrues. Regarding these standards, the central bank DCEP adopts a central bank-commercial bank two-tier system issued to financial institutions; the so-called broad account system between accounts and tokens, which supports loose coupling of bank accounts, is neither a complete account system , Is not a complete token technology; at the same time, DCEP is based on M0 and does not pay interest like RMB cash.
These standards of digital currency are still being explored, and there is a lot of controversy. It is not that whoever issued the first grabbed the standard, because the first mover may be subverted or even overturned. For example, the accessibility standards. Now several leading central banks are issuing to financial institutions. This can not only reflect a technological advancement without hindering the current monetary policy transmission, but also play the role of commercial banks to prevent financial disintermediation. However, most central banks believe that CBDC will eventually be issued to the public. In this case, the central bank is just another commercial bank with strong market power, which may potentially lead to conflicts between monetary policy or financial stability and commercial activities. On October 19, Fed Chairman Powell emphasized that for the United States, “it is more important to make comparisons first. To be right means that we must not only look at the potential benefits of CBDC, but also see its potential risks, and realize Important trade-offs for careful consideration.”
The author believes that the reason why the digital currency standard is not yet ready to grab is that digital currency technology is still in the process of exploration and development. During the development of the Internet, we are deeply influenced by a concept, that is, “third-rate companies make products, second-rate companies make brands, and first-class companies make standards”. This concept is sometimes correct, but it depends on the history. stage. I remember that in 2014 and 2015 when the blockchain was just launched, a large group of people in China were keen to establish various industrial alliances with the purpose of making international blockchain standards for various industries such as finance. Last year, national leaders spoke about blockchain. Since then, many government departments have contributed money to support the exploration of blockchain standards. However, blockchain technology is still in the initial exploration. It is difficult to have any standards for a new thing in the embryonic stage, because both the technology and the market development path are faced with complicated choices that are confused. At this time, even if there is a temporary Standards will also be abandoned in the future development process. Therefore, at the start-up stage of technology, the important thing is not to grab standards, but to use energy to explore technological innovation, market demand and future trends.
In the development of blockchain and digital currency, there is a saying in the industry, which is called Chinese blockchain and foreign blockchain. In China, blockchain cannot issue coins. The current development hotspot is industrial blockchain, which is the application of blockchain in various industries. Blockchain technology is used for traceability, data sharing, and credit enhancement mechanisms. A major focus is to develop blockchain standards for all walks of life and build a pyramid structure like BSN. And foreign blockchains are exploring the future direction of blockchains, such as the exploration of blockchain 3.0, after Bitcoin as 1.0 and Ethereum as 2.0, because the Bitcoin white paper proposed a peer-to-peer digital cash system, The underlying technology of blockchain has come to the fore; Ethereum has proposed a Turing complete system that can be equipped with smart contracts to push the blockchain technology pioneered by Bitcoin to a broad application market. For Blockchain 3.0, what is now in full swing is DEFI (Decentralized Finance). DEFI includes stable coins, including decentralized exchange uniswap, including loan compound, and expects to use smart contracts to put traditional finance in disintermediation The market does it. The exploration of DEFI is the result of people spontaneously looking for a direction under the Ethereum developer ecology. It is equivalent to the market’s efforts in various directions and finally formed a joint force. This ecology and power is completely different from the domestic blockchain development path. Similarly, the so-called formation of international blockchain standards is even more difficult to talk about.
For DCEP and digital currency standards, there is another thing to consider is the relationship with innovation. The central bank’s website recently released a draft revision of the “People’s Bank of China Law” to solicit public opinions. Article 19 concerning digital currency: RMB includes physical and digital forms, and Article 22: No unit or individual may produce or sell tokens Tickets and digital tokens.
In this regard, I think: First, how to define digital tokens. Jack Ma said that digital currency will redefine currency. My understanding is that the nature of currency in the digital currency era will have many levels. I think the central bank does not need to ban all digital tokens, because some tokens are actually digital assets, rather than currencies as general equivalents; the second is how digital currencies can adapt to the future digital economy, if it is just the digital issuance of legal currency, it cannot To meet the development of the digital economy, to adapt to the future economic form, the digital currency must have smart contracts and be programmable. In terms of programmable and smart contracts, if there are no digital tokens issued by the society to adapt to the market, DCEP alone is sufficient It is not required by the digital economy; thirdly, in terms of issuance regulations or issuance philosophy, Jack Ma said well that digital currency is far from reaching the time to grab the standard. It is not that who is the first to issue is the standard. The biggest consideration for digital currency is to To adapt to the future development and to follow the trend of innovation, if any unit or individual is blindly prohibited from issuing digital tokens, it means that there can be no such technological and market innovation in China, but those that already have or are overseas The digital tokens issued can still be developed in the domestic market, which means that the domestic ecology must tie up its hands and feet to compete with foreign countries. How can this be done as President Xi said on October 24 a year ago. Where is the breakthrough for independent innovation?
I particularly agree with Ma Yun’s statement that what we have to do is not to connect with the advanced European and American countries at all times, but to connect with the future. Digital currencies must use a future vision to create the financial system that the world needs 30 years from now. The difference between digital currency and current currency is not only the difference in the material of issuance, but also the impact of various aspects that needs to be evaluated in depth. In the revised draft of the Central Bank Law, the issuance of digital currency is only different in material, and it does not separately specify the protection of personal privacy by digital currency. Digital currency involves too much privacy in terms of privacy and is of great importance. My suggestion is that digital currency should be The National People’s Congress legislates separately.
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