The Libra effect has been alarmed, and China is expected to open the era of encrypted digital

On June 28th, the fourteenth summit of the G20 leaders was held in Osaka, Japan. President Xi Jinping attended the special meeting of the digital economy and said that the current digital economy is developing with each passing day, profoundly reshaping the world economy and the face of human society. We must create a fair, just and non-discriminatory market environment. We must not close the door to develop, and we must not artificially interfere with the market. We must jointly improve data governance rules to ensure the safe and orderly use of data. We must promote the integration of the digital economy and the real economy. Develop, strengthen digital infrastructure construction, and promote interconnection; increase digital economy inclusiveness and bridge the digital divide.

Xi Jinping pointed out that as a big digital economy, China is willing to actively participate in international cooperation, keep the market open, and achieve mutual benefit and win-win results.

On Facebook’s official launch of its digital currency project Libra, the era of global digital currency competition has opened, and it has to be suspected that China is showing its position.

“In the era of global digital currency competition, China can’t be absent.” This is the English version of the Global Times’s commentary on Facebook’s cryptocurrency Libra. The article pointed out that Facebook is very likely to ease the regulatory pressure and reach an agreement with US regulators, Libra will thus become the actual representative of the dollar in the global digital economy. With Libra’s significant first-mover advantage in the digital economy, the US government will have difficulty blocking Libra’s penetration in the digital economy. It believes that China must participate in this round of digital economic competition. “With the advent of the global digital economy competition era, it is necessary for Chinese industries and regulators to conduct more dialogue on digital currency, understand and even encourage digital currency. Otherwise, China may fall behind in the new financial landscape. 

Three weeks after Libra’s release, the Chinese government’s top management and central media frequently voiced their voices with different attitudes. But whether it is valued or worried, all kinds of remarks are showing that Chinese decision-makers have begun to seriously consider the chain reaction brought by libra and the measures China needs to take.

In fact, China has never stopped its exploration of digital currency. It has always attached importance to the study of legal digital currency. The central bank began organizing seminars on digital currency more than three years ago, and then established the digital currency research institute of the central bank. Even in the 2018 and 2019 central bank work conferences, for two consecutive years, it was pointed out that the central bank’s digital currency research and development should be promoted, and it is emphasized that 2019 is the tough year for the monetary and gold work to further promote transformation and development.

Industry executives: Can’t take Libra lightly, if successful, subvert the banking system

Huang Yi, Vice President of CCB: If Libra succeeds, it will “subvert” the banking system.

On July 1, Huang Yi, deputy governor of China Construction Bank, said at the Dalian Summer Davos Forum about Libra’s stable currency Libra, if Libra’s model is successful, it is not a “challenge” on the banking system, but “subversion”. .

Chairman of the National Finance and Development Lab: Digital currency, especially Libra, needs in-depth research

Li Yang, chairman of the National Finance and Development Laboratory, pointed out that digital currency marks a new era of finance. This is the latest technology challenge to traditional central banks, traditional financial regulation systems, and traditional monetary systems. To understand digital currencies, especially Libra, In-depth research, especially from the foundation of monetary economics.

Wang Yongli: Three talks about Libra, it is full of challenges to become a global currency without borders.

After the release of Libra, former Chinese bank deputy governor Wang Yongli sent a paper on the social platform three times to discuss the views on Facebook’s cryptocurrency.

Wang Yongli said that Libra is still a special token used in certain online communities or business districts. It still needs to be supported by legal currency, and it is impossible to completely replace legal tender. As a fiat currency, the choice of a token linked to a basket of legal currency is much more difficult and challenging than a single legal currency. The possibility and actual effect of landing is not necessarily better than the token of a single legal currency.

Now when people discuss Facebook’s cryptocurrency, it seems that their vision has been realized or can be realized. It is believed that its 2.7 billion users will naturally become Libra users, and its application scope will exceed the currency of most countries, rather than careful analysis. Real problems such as the conditions of its implementation, existing problems, and competition.

In the case that the country continues to exist and it is difficult to die for a long time, it is unrealistic to replace the national sovereign currency or legal tender through the online digital currency; the “network stable currency” supported by legal tender and fully anchored, No matter how the specific design changes, it can only be a special token running on a specific network platform, and it is even more impossible to replace or subvert the fiat currency; it is the actual performance and flow problem of the network platform that needs to be worked hard to solve. The main focus is on the design, packaging and hype of dedicated tokens; the research and unification of online payment rules should be strengthened, and the global unified payment and clearing supervision system should be promoted.

Zhu Min, Dean of the National Institute of Finance: We should not be taken lightly on the birth of Libra

In the sub-forum “Shaping China’s Future Financial Industry”, Zhu Min, Dean of the National Finance Research Institute, talked about Facebook’s digital currency Libra. Zhu Min said that it is difficult to say that Libra is an Alipay, because Alipay is a payment intermediary, and Libra starts with payment, has reserves of principal and bonds as collateral, and has a basket of currencies for labeling and pricing. Its core concept is currency. Second, Libra’s core concept is cross-border. Third, Libra combines the policies that the central bank has to consider with the functions paid by commercial banks.

Zhu Min bluntly said, “We should not be too light to the birth of Libra. This will have a big impact on the existing financial system, the monetary system and even the future reserve system.”

But he also said that Libra now has many problems, such as its leverage problem, reserve problem, centralized management system and mechanism, there are many problems, it is still in the very initial stage, can not succeed without knowing.

Central media: close attention, can not be absent

“Global Times” English version of Facebook currency: China must participate in this round of digital economic competition

On June 25th, the English version of Global Times published a review article entitled “The era of global digital currency competition, China cannot be absent” for Libra, the Facebook cryptocurrency.

The article pointed out that after Facebook issued the digital currency Libra, it had the right to issue currency for the global 2.7 billion people, becoming an independent “central bank” in the digital economy. To alleviate the regulatory pressures that come with it, Facebook may reach an agreement with US regulators. Once the agreement is reached, Libra will become the actual representative of the dollar in the global digital economy. With Libra’s significant first-mover advantage in the digital economy, the US government will have difficulty blocking Libra’s penetration in the digital economy. China is no exception.

The Global Times believes that China must participate in this round of digital economic competition.

CCTV: China is concerned about the application of new technologies such as digital currency encryption assets in the financial sector

CCTV Chinese International Channel reported on June 28 that at the Chinese and foreign media briefings held by the Ministry of Foreign Affairs, the G20 Chinese spokesperson said that the G20 is also concerned about the application of new technologies in the financial sector, including digital currency, encryption assets, etc., China is here. The aspect should be said to be doing better.

People’s Daily Review Facebook: A clear understanding of the risk challenges and unknown consequences of Libra

On June 28, the People’s Daily published an article today to discuss Facebook’s release of its encrypted digital currency Libra. The article pointed out that Facebook wants to treat digital currency and blockchain separately, and use offline asset endorsement to solve Libra’s currency fluctuation problem, while still using blockchain to achieve “decentralized” peer-to-peer transactions and smart contracts. Obviously, Facebook wants to break the application bottleneck of digital currency through this method.

However, can Libra really become the world’s digital currency in the future? Can Zuckerberg really realize the vision of “transferring funds around the world as easily as sending text messages or sharing photos”? I am afraid I have to make a big question mark. In fact, Libra brings a variety of known risk challenges and unknown consequences, and there must be a clear understanding of this.

Central Bank Work Conference: Two years of emphasis on promoting the central bank’s digital currency research and development

In fact, China has never stopped its exploration of digital currency. It has always attached importance to the study of legal digital currency. In early 2016, the People’s Bank of China held a digital currency seminar in Beijing. Zhou Xiaochuan and Fan Yifei both attended the meeting. In November 2016, the central bank began preparations for the Digital Currency Institute. In 2017, the Digital Money Institute was officially listed.

During the two sessions in 2018, Zhou Xiaochuan , former president of the People’s Bank of China, introduced the central bank’s research on digital currency, saying that the central bank began organizing seminars on digital currency more than three years ago, and then established the central bank’s digital currency research institute. The most recent move is to organize distributed R&D with the industry and develop digital currency by cooperating with the market.

Zhou Xiaochuan also revealed that the 2017 central bank organization of digital currency and electronic payment research projects has been approved by the State Council, and is currently organizing research and development in the industry.

In October 2018, the People’s Bank of China announced the 2019 open recruitment position of the central bank’s directly affiliated units. Among them, the Central Bank Digital Money Research Institute recruited four people with digital currency related expertise. Mainly responsible for legal digital currency related software systems, encryption technology and security model, trading terminal chip technology research and development work, such as computer, cryptography, microelectronics.

In the 2018 National Monetary Gold and Silver Work Video Conference of the People’s Bank of China, Fan Yifei, member of the Party Committee and deputy governor of the People’s Bank of China, proposed to further intensify reform and innovation and solidly promote the research and development of the central bank’s digital currency.

In the 2019 National Money Gold and Silver Working Conference, Fan Yifei emphasized that 2019 is the tough year for the monetary and gold work to further promote transformation and development , and once again proposed to increase reform and innovation, and further promote the central bank’s digital currency research and development.

On March 13, 2019, Yao Qian, former director of the China Central Bank Digital Currency Research Institute and general manager of China Securities Depository and Clearing Corporation, published the article “Central Bank Digital Currency: Optimization of the Monetary System and Its Distribution Design”. The article explored the central bank’s digital currency. The issuance mechanism pointed out that the issuance of central bank digital currency should have economic state contingency, and it shows that this feature is the key to the central bank’s digital currency to solve the dilemma of modern monetary policy.

The article pointed out that the central bank’s digital currency plays an important role in optimizing the payment function of the existing legal tender. On the one hand, this is reflected in the fact that the central bank’s digital currency can reduce the dependence on the payment services provided by the private sector, which can alleviate the central bank’s regulatory burden and pressure, and can also strengthen the authority of the existing legal currency.

On the other hand, the issuance of central bank digital currency can solve the dilemma faced by modern monetary policy, including the inefficiency of policy transmission, the difficulty of countercyclical regulation, the inefficiency of money from the real economy to the virtual economy, and the management of policy expectations.

According to Russian satellite news agencies and radio stations, Liu Dongmin, director of the International Finance Research Office of the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, said that in recent years, the development of digital stable coins has clearly exceeded the central bank’s digital currency. When we talked about legal digital currency in the past, the legal digital currency and the central bank digital currency are synonymous. The legal digital currency is the central bank digital currency. But in the past few years, digital stable coins have begun to develop rapidly in Western countries, including Libra like Facebook. At this time, we found that the legal digital currency has two options, one is the central bank digital currency that everyone cares about in the past, and the other is the digital stable currency.

Liu Dongmin pointed out that because Facebook’s own business ecology is very strong, it is a global giant social media with 2.7 billion active users, and the cross-border payment involved may be nearly 700 billion US dollars. Therefore, when Facebook decided to issue digital stable currency, it not only possessed the stable value foundation of other digital stable currency national credit support, but also obtained a relatively strong commercial ecological support.

In this case, China’s opportunities are fleeting. The US dollar hegemony was largely established after the United States actively participated in the reconstruction of the post-war world economic order and the construction of the international monetary system. Now those countries that are more actively involved in regulating cryptocurrencies may become the new hegemons of the world’s finance, and they also largely determine the development path and direction of the international monetary system for a long time to come.

Source: Chaindo / ChainGot

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