The 2022 Tsinghua PBCSF Global Financial Forum opened on the 16th. The theme of this forum is “Stability and long-term development, and finance helps high-quality development”. Specifically, it will focus on green financial development under the “dual carbon” goal, infrastructure construction and REITs exploration and practice, global economic governance and financial cooperation and opening up, digital economy Discuss with topics such as innovation in financial institutions.
Liao Min, Deputy Director of the Central Finance Office and Deputy Minister of Finance, Liu Liange, Secretary of the Party Committee and Chairman of the Bank of China, Zhou Xiaochuan, former Governor of the People’s Bank of China, Wu Xiaoling, former Deputy Governor of the People’s Bank of China and other important persons attended the opening ceremony of the forum and delivered speeches. speech.
Zhou Xiaochuan’s keynote speech on “Several Questions and Responses on Digital Currency” attracted the attention of all parties. Ruisi Finance now organizes the original text of the speech as follows for readers.
1. How to distinguish and evaluate CBDC (central bank digital currency)? How to distinguish the feasibility and stability of central bank digital currency as money?
The first concern is stability. Zhou Xiaochuan believes that stability is best not to be considered as an alternative, either stable or unstable. In fact, stability may be a continuous indicator. Some coins will be very stable, close to 1, while some are not very stable, or unstable, close to 0. It is necessary to understand that issuing banknotes is a liability. From the perspective of the central bank’s balance sheet, issuing M0 is a liability of the central bank.
“The stability and instability of the currency is not self-proclaimed, but depends on what is behind it. You say you have 100% reserves, do you really have it? Where did you put it? Has anyone proved it to you that there is? No one has audited it? Generally speaking, this currency is on the liability side. Do you want to use it? Including buying government bonds, if it is used on the asset side, how is the asset side safe ? How is the liquidity ? Is there transparency in the mistakes ? These are all things that need to be answered.” Zhou Xiaochuan said.
2. How to understand the digital currency e-CNY (digital renminbi) emphasized by the Central Bank of China is positioned at M0.
Zhou Xiaochuan said that the current digital renminbi is an alternative to M0, which shows that it wants to focus on the retail sector, that is, it hopes to be applied in the retail sector. The reason why M1 is not considered is because the central bank and the financial system. The operation of M1 is still relatively normal, and there is not much room for improvement. It is not that the M1 of commercial banks is “unstable”. In contrast, M1 of commercial banks has characteristics that are highly close to central bank money.
3. Whether the People’s Bank of China should speed up the issuance and issue more digital currencies, especially cross-border digital currencies.
Zhou Xiaochuan said that he personally thinks that he can decide how much currency to print, but whether it can go out and circulate depends on the application and whether people are using this thing.
The central bank must make the issued currency really in demand in the market, especially in the retail market. From the point of view of the common people, in the end, we must see that the common people are willing to put this currency in their wallets, whether it is used today or tomorrow, and they are not in a hurry to return the money (whether it is paper or digital) after receiving it. For the bank, this is a test that should be seriously considered.
4. How to grasp the competitive selection of various schemes and products in digital currency?
Zhou Xiaochuan believes that, in general, we should encourage innovation and encourage new product development. After research and development, certain conditions should also be created for them to be piloted. As long as they are piloted, there are multiple schemes and there is competition between them, there will be survival of the fittest. But will there be social problems in the process of disappearing? Will anyone be damaged? So still be very careful.
He emphasized that the most vigilant is the misappropriation of customer funds by innovators , BigTech, and FinTech. “There are indeed some people who want to embezzle other people’s money from the beginning of the design of the system, but they are a minority; in most cases, there is a problem in the operation process and a hole occurs, and then they have to embezzle the customer’s funds. We also see In some collapsed institutions, in fact, the initial wishes were good, but later they embezzled client funds and committed crimes of illegal fundraising.”
5. Is there a need for “standards first” in the field of digital currency?
Zhou Xiaochuan thinks not necessarily. He said that it is impossible to decide in advance who will make the standards, “advanced standards cannot be formulated” , no one can sit in the office and think about all these issues in advance. At a certain stage, some institutions will enhance this commonality, and then the interoperability can be promoted compulsorily or semi-mandatory.
“Some people say that in order to develop digital currency, legislation must be first, and international standards must be established. This wish is good, but it is impossible to make legislation so clear in the process of research and development and innovation. ” Zhou Xiaochuan said.
He continued that if third-party institutions want to innovate, make digital currencies or participate in payment systems, they must move closer to high standards to varying degrees, and “can’t be clever.” “You say those standards are too high, the cost is too high, I avoid it, this is not good or that, I don’t follow your standards as a technology company, but if you deviate from these standards, there may be problems with stability , in addition to your own stability, has an impact on the stability of the entire system.”
6. Under the current geopolitical instability, what role will digital currency play between SWIFT and CIPS?
“At least China’s e-CNY (digital renminbi) is designed for retail, for the convenience of the people and the convenience of merchants, not to replace the US dollar, so since it was not designed for that purpose, it may not be possible to assign this function to it now. It can hold up.” Zhou Xiaochuan said in the opening speech of the forum: “Of course we do not rule out the possibility of cross-border payment in the future of e-CNY , but I estimate that it will also focus on the application of cross-border retail, not easily Used as a military weapon. “
Since the conflict between Russia and Ukraine, some Russian banks have been excluded from the Society for Worldwide Interbank Financial Communication (SWIFT) at the request of the United States, the United Kingdom, Canada and other countries. Zhou Xiaochuan said on the aforementioned occasion that SWIFT is not a cross-border international payment system, but a communication organization. Because international trade needs to solve many trade information problems through communication before payment, including contracts, warehousing to payment instructions, letters of guarantee, etc., and due to the large number of participating financial institutions, SWIFT has done a good job in encrypting its own information, and many information are Automatic processing without human intervention, so it is widely used in international trade.
“SWIFT is not irreplaceable, but there are many things to be done to replace SWIFT. There are many things before and during the transition period that may affect trade.” Zhou Xiaochuan said that if you avoid SWIFT and open another channel, there may be a transition period. In the beginning, there may be too few participants in this new system, and if many communications cannot be resolved, it will affect the efficiency of trade. For example, some trades were completed in a week in the past, but now they have not been completed in two months. In addition, there may be scruples in security, and there may be errors in the final processing. Sometimes there are loopholes in manual processing, and there is the possibility of errors.
He said that CIPS (CNY Cross-border Payment System) is designed for cross-border RMB payment , settlement and clearing. This system also allows the use of a few other mainstream currencies, but so far the amount of payments in other currencies is very small. , In addition, the communication function is also integrated into the system, but it is not used much. “It’s the status quo, and it can’t be pointed at it for this or that.”
“To be honest, if our financial payment system or payment communication system slips into some kind of Cold War pattern, it will be a loss for everyone.” Zhou Xiaochuan said.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/zhou-xiaochuan-delivered-a-keynote-speech-on-several-questions-and-responses-to-digital-currency/
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