Digital RMB will lay an important foundation for the future development of digital economy and asset confirmation

On October 23, Wang Yongli, chief economist of Neptune Group and former deputy governor of Bank of China, delivered a speech at the “2021 Global Wealth Management Forum” hosted by Caijing Magazine and Caijing Think Tank, saying that “digital RMB brings the greatest The change lies in its manifestation and operating mechanism. It will lay an important foundation for the future development of the digital economy and the confirmation and protection of digital assets.” The full text of the speech is as follows:

Focusing on the theme of digital currency promoting a new pattern of wealth management, I would like to share a few views with you.

First, the concept of digital currency .

I think that here we are talking about digital money, not like Bitcoin , Ethernet coins and other non-sovereign to the center of the network encrypted digital currency, is not like Libra , ESDR etc. linked to a basket currency sovereign structural envisaged the supranational Digital currency. It refers to the digitization of national sovereign currency or legal tender, which is the central bank digital currency CBDC, which is our digital renminbi in China.

Second, the positioning of the digital renminbi .

We know that the central bank has always emphasized that the digital renminbi is positioned as cash in circulation (M0), which is mainly used to replace cash and retail payments. In our current total currency of almost 230 trillion yuan, the cash in circulation is more than 8 trillion yuan, and the proportion of real cash payments is even lower. If the digital renminbi is launched only at M0, and M0 cannot be completely replaced, its scale is very limited and its role must be limited. In particular, it will cause the coexistence of the two operating systems of the digital renminbi and the traditional renminbi. This will bring many new challenges and risks to currency management.

I always think that we must carefully consider this positioning. When the digital renminbi is launched, my own concept is to replace all traditional renminbi as soon as possible. The central bank can not only issue digital renminbi as a substitute for cash, but also use digital renminbi when providing liquidity such as re-lending. Commercial banks can not only use digital renminbi for payment and settlement, but also use digital renminbi for credit placement and derive new digital renminbi. This will enable the scale of digital renminbi to fully meet the needs of the entire society and even internationalization.

In addition, as soon as possible to replace the traditional RMB operating system, I think this will produce greater benefits. This is something we need to take seriously.

Third, the major changes that the digital renminbi may bring .

Judging from the current digital renminbi test, the basic requirement is that the owner of the digital renminbi must use legal identity information and contact information, such as the mainland’s second-generation ID card and mobile phone number to download the central bank’s digital renminbi. Then, among the operating agencies listed under the central bank’s digital renminbi, one or several operating agencies can be selected to open a digital renminbi wallet for exchange and payment of digital renminbi. From this we can see that the biggest difference between the digital renminbi and the traditional renminbi is that the popularization of the former may enable the central bank to fully grasp all the user information and transaction data of the digital renminbi. Commercial banks and payment institutions can only have the information and payment data of users who open digital renminbi wallets in their place.

From this point of view, it can help the central bank achieve full-process and all-round monitoring of the digital renminbi. It is conducive to enhancing the accuracy and effectiveness of monetary policy. At the same time, after the central bank has comprehensive information on RMB transactions, it will weaken the big data monopoly of commercial banks and payment institutions. Achieve the limited anonymity of the digital renminbi that the People’s Bank of China said, and protect business secrets and personal privacy to a certain extent. Because in a previous transaction, the bank or payment institution can know the situation of both parties to the transaction at the same time, and the application of digital renminbi only the People’s Bank of China can understand the overall situation of the two parties in the transaction, and the payment institution can only know the side of the party that opened the wallet. Condition. I think this is the most significant breakthrough that digital currency may bring.

Under this circumstance, further changes will be brought about. When we talk about the digital economy today, everyone attaches great importance to big data, but have you noticed that there is a prominent problem in it, that is, today’s big data is all about business processing. The big data of one party, not the business promoter, including the big data of legal persons or individuals. If we look at it from the perspective of the behavioral issuer, its personal identification information and transaction data will be scattered in various business processing institutions. Therefore, it is scattered, fragmented, and overlapping, and there is almost no big data that truly encompasses legal persons or individuals. This is further related to how to do big data confirmation and rights protection in the future. If it is all decentralized, how can scientific and reasonable rights protection be achieved? For the so-called digital assets, I think the most important thing is that in the future, legal persons or individuals, that is, behavior promoters and business promoters, must be the main body. This is the basis for the confirmation of information and data and the protection of rights and interests. The digital renminbi may have a good sign, and it may be able to comprehensively collect all the data of the digital renminbi for everyone and every company. This is the right to confirm the entire data in the future and promote the unified credit investigation of the whole society. And the development of the digital economy will lay an important foundation. This is what I particularly value now. I think the biggest change brought about by the digital renminbi is not its manifestation, but its operating mechanism (compared to the traditional renminbi) will undergo profound changes. For the future development of the digital economy, digital Asset confirmation and rights protection lay an important foundation.

The fourth point is to innovate wealth management based on the technical characteristics of digital renminbi .

We know that wealth management requires the design of suitable wealth management products or investment portfolios for customers. This premise is that you have to know your customers very well and understand their wealth and its changes. The promotion and use of digital renminbi may help us better understand the customer and his wealth. In the future, our digital asset itself will be a very important financial object or investment object. In these respects, we also need to design a more efficient wealth management and transaction processing system based on the changes that the digital RMB may bring, promote the digital and intelligent wealth management and supervision, and further improve efficiency, reduce costs, and enforce strict rules. Control, promote the formation of a new pattern of wealth management, enter a new era, and achieve better development.

When it comes to digital currencies, everyone must know that even digital cryptocurrencies such as Bitcoin and Ethereum actually have the problem of competing with each other. The rules of Bitcoin are not exactly the same as Ethereum and other various encrypted digital currencies. Therefore, people who study blockchain have been studying cross-chain issues. Just look at a Bitcoin blockchain or Ether. The block chain of Fang Fang may cover the whole world, but it is not easy to make cross-platform and cross-chain payments for different encrypted digital currencies. Whether it is the transaction of encrypted digital currency or its value realization, it must be connected to external exchanges and trading platforms. Without this transaction, it is basically difficult to realize its value without exchange with legal currency. . At the same time, don’t think that encrypted digital currencies can be used globally. It can cover the world by itself, but there are also problems if different platforms are involved.

The central bank’s digital currency is a bit more stringent. One is that the central bank also uses blockchain technologies such as Ethereum to create a system platform like them, which is completely open to the world, decentralized and anonymized, but the question is whether you dare to give up your supervision, if you dare to give up supervision Basically, CBDC is not necessary. If not, digital renminbi must still have limited anonymity, with legal identity information and communication methods as the lowest level things. If your quota is a little higher, you must continue to increase the authentication methods. When China has a regulated digital currency, other countries may also have their central bank digital currency. If the rules are not uniform and the system is not docked, it must be impossible to easily universalize it globally. So now, don’t think that the digital renminbi can be used globally across borders as soon as you push it. It’s still far away. Because of this problem, when multiple central bank digital currencies coexist, the problem of connectivity between them must be solved. Now, the People’s Bank of China is working with international organizations such as BIS to jointly build a “bridge” across CBDC. This is a very important issue. necessary. I think from a global perspective, it is better for regulatory agencies to have some standard interfaces and some general rules to reduce mutual friction. There are still many difficulties and challenges in the global cross-border use of digital currencies, especially CBDC. It is far from what people imagine. After the launch of CBDC, it can be very convenient, efficient, and low-cost cross-border use, far from it.

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