Yao Qian, director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, said that with the rise of the modern information technology revolution, the impact of technology on currency is reaching an unprecedented level. Bitcoin has triggered a global large-scale digital currency experiment. The digital age has come, and the digital currency era is bound to come.
A few days ago, Yao Qian, director of the Science and Technology Regulatory Bureau of the China Securities Regulatory Commission, wrote an article in the “Comparison” magazine, expounding the development of the central bank’s digital currency and the theoretical logic behind it.
1. The impact of technology on currency substitution is reaching unprecedented levels
In his article, Yao Qian reviewed the changes in currency morphology. Due to technological advancement, currency morphology has undergone the evolution from commodity currency, metal currency, paper currency to electronic currency, and has now extended to credit currency, highly liquid financial assets and other broader terms. Currency level.
With the rapid development of digital technologies such as blockchain, big data, cloud computing, and artificial intelligence, the influence of technology on currency evolution has further deepened.
This impact is causing widespread concern from central banks, industry and academia in various countries.
According to Yao Qian’s article, in addition to the transaction transfer function, currency is often moved by value. Where the value is more stable and the return is higher, the currency flows. And this kind of flow, there is a currency substitution. This kind of currency substitution can lead to all kinds of tragicomedies in the world, and the big one can lead to “wars” to seize currency dominance, such as beggar-thy-neighbor exchange rate wars, various trade/currency alliances, and international monetary system reforms and games.
In the past, currency substitution was due to changes in the value connotation of currency, which can be called a “classical currency war”, but now currency substitution caused by technology can be called a “new currency war”.
Another “new currency war” is the challenge of electronic payment to cash. In recent years, the utilization rate of non-cash payment methods such as Alipay and WeChat Pay has continued to increase sharply. Terms such as “cashless society” and “cashless city” have frequently appeared in the media, and have even become slogans for some third-party payment institutions to promote their businesses. Closely related to this is that the central bank currencies of many developed and emerging market countries have fallen as a percentage of the total currency. Since 2003, the ratio of China’s base currency to M2 has fallen by 5%, India has fallen by 7%, and the Eurozone has fallen by 3%. Part of the reason is that central bank currency (especially cash) has been replaced by more technologically advanced electronic payment methods and even private currencies in the field of circulation.
For legal tender, the slogan of “de-cashing” of private payment tools and the rise of “decentralized” digital currency is more like a Morning Call (wake-up call), awakening the central bank should pay attention to the stability of the value of legal currency, and wake up The central bank cannot ignore the unavoidable technological wave of digital cryptocurrency, and awakens the central bank to pay attention to the integration and innovation of central bank currency and digital technology…
Moreover, with the rise of the modern information technology revolution, the impact of technology on currency is reaching an unprecedented state, and will continue to be interpreted, expanded and deepened. It may even lead to changes in the entire monetary and financial system, thus causing widespread concern from all walks of life around the world.
2. The “new currency war” triggered by Bitcoin has just begun
Yao Qian believes that this “new currency war” can be traced back to the 2008 global financial crisis. The outbreak of the financial crisis has widely questioned the reputation of the central bank and the credit intermediary function of the entire financial system. The Austrian school of thought has rebounded, and supporters of currency “denationalization” have continued to increase. In this context, the decentralized programmable currency represented by Bitcoin, which is not supported by sovereign state credit as its value, is “born out of nowhere.” Some people even call it digital gold, pinning the dream of replacing legal tender. This is the “war” between private currency and legal tender brought about by the development of information technology, and the challenge of “denationalization” of currency to legal tender.
The Libra white paper pointed out: “Libra’s mission is to build a simple, borderless currency and financial infrastructure that serves billions of people.” Looking at it now, its grand mission may not necessarily be successful, but for such a vision, we should Active response, at least in terms of technology or mode, it provides us with new references and options, which is beneficial to the progress of society.
Bitcoin triggered a large-scale digital currency experiment around the world.
As early as 2014, the People’s Bank of China officially launched the legal digital currency research to demonstrate its feasibility; in 2015, it continued to carry out research on nine major topics; in 2016, the People’s Bank of China Digital Currency Research Institute was established.
After 2016, central banks of various countries have also begun to take action to carry out central bank cryptocurrency experiments based on blockchain technology, such as Canada’s Jasper project, Singapore’s Ubin project, the European Central Bank and the Bank of Japan’s Stella project, and Thailand’s Inthanon project. There is also the LionRock project in Hong Kong, China.
This is a brand new track. Participants include private sector, public sector, sovereign countries, international organizations, financial institutions, technology companies, industrial alliances, geeks, economists… overall view This “new currency war” has just begun. There are many areas that need to be studied and explored, such as disputes over technical routes, digital privacy protection, government supervision, social governance, network and information security, monetary sovereignty, financial infrastructure innovation, risk prevention, etc.
3. The central bank digital currency experiment based on blockchain technology in various countries is progressing rapidly
Unlike private digital currencies such as Bitcoin, legal digital currencies or central bank digital currencies are “rooted”, and there are no price instability and compliance issues.
Some economies have chosen the cryptocurrency technology route represented by blockchain technology, such as Canada’s Jasper project, Singapore’s Ubin project, the European Central Bank and the Bank of Japan’s Stella project, Hong Kong’s LionRock project, and Thailand’s Inthanon project. Some economies are vacillating, and there are still disputes over whether to adopt blockchain technology.
Blockchain technology has the advantages of being difficult to tamper with, traceable, traceable, safe and reliable, heterogeneous and multi-active, and intelligent execution. It is the prototype of a new generation of information infrastructure, a new type of value exchange technology, a distributed collaborative production mechanism, and The basis of a new algorithmic economic model. Currently, central bank digital currency experiments based on blockchain technology in various countries are progressing rapidly, and the content has covered a wide range of topics such as privacy protection, data security, transaction performance, identity authentication, coupon payment, and payment redemption.
Yao Qian believes that as a brand-new technology, blockchain certainly has shortcomings and shortcomings of one kind or another, but this just shows that the technology has huge room for improvement and development.
Yao Qian finally stated that although countries have “introduced but not issued” and there has not yet been a real central bank digital currency, whether it is the digital dollar plan or the digital dollar plan white paper, both indicate that the United States has officially joined the “hot central bank digital currency war.” .
The international financial market has changed. The traditional financial center is the bank, and the digital financial center will be the blockchain or blockchain network platform in the future. The International Monetary Fund believes that this is an unprecedented historical event that has changed the structure of the financial market and foreign exchange management. , World reserve currencies, regulatory systems, and financial stability.
4. Musk bought Bitcoin because of negative interest: the emergence of new currency competition
In February 2021, Tesla’s Musk disclosed the reason for his large purchases of Bitcoin, because the US dollar would have negative interest. In response to the resulting asset depreciation, he found Bitcoin. We can trace this reasoning process:
The new crown virus has triggered an economic crisis in the United States;
The Fed printed a lot of money, the U.S. dollar depreciated, interest rates fell, and it might even fall to negative interest rates;
Other assets have followed, such as U.S. stocks soaring;
Musk has a lot of U.S. dollars. Because of the depreciation of the U.S. dollar, he was looking for valuable assets to invest, so he found Bitcoin;
But Bitcoin is a liquid asset. After its value has risen sharply, its liquidity has surpassed the liquidity of legal currencies in most countries in the world;
The dollar began to be threatened.
The phenomenon of digital tokens replacing the U.S. dollar is a new phenomenon. In the past, this phenomenon would only happen in places where the domestic fiat currency was not good enough, but this time it happened when the domestic fiat currency is the world’s reserve currency! If digital tokens can challenge the U.S. dollar, other legal currencies will also be challenged.
In February 2021, the title “US Government vs. Bitcoin ” (US Government vs. Bitcoin ) appeared in many media in the United States . This means that Bitcoin has affected the U.S. dollar this time.
After reading it, you may not be able to believe it. This event will surely shake the world, the United States’ madness, the real challenges facing China, and the dangers that countless people can hardly imagine. In particular, the continuous spread of the epidemic has made people deeply aware of the true cruelty of this world.
5. The new and complicated Three Kingdoms currency war
In the analysis of the IMF report in November 2020, it has been proposed that the new currency war is no longer a binary competition (fiat currency, stable currency) that the United States believes, but a ternary competition (fiat currency, stable currency, digital token). At that time (November 2020), the phenomenon of digital tokens replacing the U.S. dollar had not yet appeared, but now, this phenomenon has begun to appear in February 2021.
In the history of the Three Kingdoms period, in addition to the war between the two countries (while the other one was watching), there was a history of the two countries jointly attacking a third country. Battle of Chibi). If history can be used for reference, does it mean that in the future, fiat currencies can cooperate with stable currencies to fight digital tokens together? Because digital tokens are a global “currency” that affects every country in the world, this will not only affect the United States, but other countries will be affected as well. The digital currency of the United States is Facebook’s Diem coin, not Bitcoin.
If this is feasible, how should it be laid out? The U.S. Treasury Department has not considered this, and the Fed may not have considered this. I leave it to the reader to think for himself.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/yao-qian-the-global-new-currency-war-triggered-by-bitcoin-has-just-begun/
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