Why do big companies issue digital currency
Publish: 2021-04-06 19:13:43
1.
digital currency can be understood as the digitalization of RMB, which has two obvious advantages: "no account payment" and "no network payment". After Facebook launched Libra this year, the central bank's digital currency has also stepped in. We see both challenges and opportunities
in a word, digital currency is still RMB in fact, but some changes have taken place in its form. We say that digital currency is of great significance. It not only enhances the security and controllability, but also makes counterfeit currency "invisible". In addition, the issuance of the central bank's digital currency is also concive to the central bank's more convenient and transparent management
2. The central bank's plan to issue digital currency is a decision made according to the development of the times
the simplest example is that city people love to use third party payment tools WeChat and Alipay to pay the bills, and the cash payment is decreasing. The third party payment is more and more popular among young people. In Europe, some developed economies are trying paperless trading. Moreover, bitcoin and other digital currencies will circulate in China after 2013, and the central bank will be inspired to issue digital currencies
in addition to the digital currency to be issued by the central bank, there are actually many application-oriented digital currencies, such as the tokens of crowdfunding projects on the European crowdfunding platform.
the simplest example is that city people love to use third party payment tools WeChat and Alipay to pay the bills, and the cash payment is decreasing. The third party payment is more and more popular among young people. In Europe, some developed economies are trying paperless trading. Moreover, bitcoin and other digital currencies will circulate in China after 2013, and the central bank will be inspired to issue digital currencies
in addition to the digital currency to be issued by the central bank, there are actually many application-oriented digital currencies, such as the tokens of crowdfunding projects on the European crowdfunding platform.
3. Private digital currency forces the monetary authorities to study the issue of central bank digital currency. There are not only bitcoin, lightcoin and other digital currencies, but also the domestic currency surplus China has started to issue applied digital currencies
all kinds of private digital currencies represented by bitcoin have sprung up, developed rapidly and exerted great influence. Many economists and financiers in the world, including central bankers, have been greatly impacted, and some even mistakenly believe that private digital currency may replace sovereign currency. As early as the end of 2013, the author clearly pointed out that virtual currency (including private digital currency) is not a currency in essence and cannot replace sovereign currency [3]. With the passage of time, the non monetary nature of virtual currency is graally recognized by people
private digital currency uses a series of new technologies, which have strong penetration into the financial system and even impact on the operation of modern economy and finance. Therefore, in order to maintain the stability of the monetary system and even the whole financial system, the monetary authorities must also use the same or even more advanced technology and design to study the issue of central bank digital currency. If the private digital currency is allowed to develop disorderly, it will have a serious impact on the monetary authorities' policy regulation and the economic and financial system
first, if private digital money is diverted and replaced by some sovereign money, the effectiveness of monetary policy will be weakened and the transmission mechanism will be distorted. Private currency and sovereign currency are in the relationship of one ebb and flow. With the continuous expansion of the scope of use of private digital currency, the use of sovereign currency will graally decline, which will rece the monetary authority's control over sovereign currency. At the same time, the influence of monetary policy regulation on the supply and circulation of sovereign money will decline and become unstable, which will weaken the effectiveness of monetary policy and distort the transmission mechanism. If the private digital currency is widely used but not issued and regulated by the monetary authority, the modern economy will lose an important means of regulation, and the economy will not function normally because it is not regulated by monetary policy< Second, the value of private digital currency fluctuates greatly, which threatens financial stability. Private digital currency is not a real currency without national credit endorsement. Its price is easily affected by market expectations, and its volatility is very high, so it is difficult to guarantee the market liquidity. With the expansion of the scope and scale of private digital currency, the probability of indivial private digital currency risk evolving into systemic risk will also rise< Thirdly, the supply of private digital money is relatively fixed, which is difficult to meet the needs of modern economic development. Taking bitcoin as an example, there is a contradiction between the upper limit of supply set by the system and the expanding social proction and commodity circulation. If it is widely used, it will cause deflation and inhibit economic development. This is also the root cause of the collapse of the gold standard
Fourth, private digital currency lacks a central regulation mechanism, which is difficult to meet the needs of the stability of the modern monetary system. The so-called "decentralization" without centralized issuing and regulating institutions is a common feature of private digital currency. If the private digital currency is generally accepted by the whole society, and the monetary authority is unable to stabilize the currency value through the central adjustment mechanism, it will not only cause economic fluctuations, but also shake the monetary system based on national credit[ 4]
fifthly, private digital currency brings challenges to anti money laundering, anti terrorist financing and capital control. Private digital currency is characterized by anonymity of transaction and free transnational flow of funds, which makes it easy for criminals to cover up the source and investment direction of their funds, and indivials to evade the regulations on the amount of foreign exchange and foreign exchange remittance [5], which brings convenience to money laundering, terrorist financing and capital control evasion< Sixth, private digital currency increases the difficulty of consumer protection. The price of private digital currency fluctuates greatly, market participants are almost not regulated, the security of users' funds is not guaranteed, and the transaction is not transparent. Therefore, private digital currency transactions are prone to fraud, theft and fraud. This not only causes the lack of protection of consumers' rights and interests, but also increases the difficulty of evidence collection and investigation by the regulatory authorities[ 6]
therefore, in order to deal with the impact of the rapid development of private digital currency on monetary sovereignty, monetary policy, financial risk and consumer protection, the monetary authorities clearly realize that the state should start to study the issue of central bank digital currency as soon as possible. In the future, with the support of national credit, the digital currency of the central bank should continuously meet the requirements of the society for the use of money technology and become a widely recognized settlement and payment method. Only in this way can the monetary authorities expand the use of sovereign currency and rece the impact of private digital currency on the monetary system and the entire financial system Transferred from NetEase Finance)
all kinds of private digital currencies represented by bitcoin have sprung up, developed rapidly and exerted great influence. Many economists and financiers in the world, including central bankers, have been greatly impacted, and some even mistakenly believe that private digital currency may replace sovereign currency. As early as the end of 2013, the author clearly pointed out that virtual currency (including private digital currency) is not a currency in essence and cannot replace sovereign currency [3]. With the passage of time, the non monetary nature of virtual currency is graally recognized by people
private digital currency uses a series of new technologies, which have strong penetration into the financial system and even impact on the operation of modern economy and finance. Therefore, in order to maintain the stability of the monetary system and even the whole financial system, the monetary authorities must also use the same or even more advanced technology and design to study the issue of central bank digital currency. If the private digital currency is allowed to develop disorderly, it will have a serious impact on the monetary authorities' policy regulation and the economic and financial system
first, if private digital money is diverted and replaced by some sovereign money, the effectiveness of monetary policy will be weakened and the transmission mechanism will be distorted. Private currency and sovereign currency are in the relationship of one ebb and flow. With the continuous expansion of the scope of use of private digital currency, the use of sovereign currency will graally decline, which will rece the monetary authority's control over sovereign currency. At the same time, the influence of monetary policy regulation on the supply and circulation of sovereign money will decline and become unstable, which will weaken the effectiveness of monetary policy and distort the transmission mechanism. If the private digital currency is widely used but not issued and regulated by the monetary authority, the modern economy will lose an important means of regulation, and the economy will not function normally because it is not regulated by monetary policy< Second, the value of private digital currency fluctuates greatly, which threatens financial stability. Private digital currency is not a real currency without national credit endorsement. Its price is easily affected by market expectations, and its volatility is very high, so it is difficult to guarantee the market liquidity. With the expansion of the scope and scale of private digital currency, the probability of indivial private digital currency risk evolving into systemic risk will also rise< Thirdly, the supply of private digital money is relatively fixed, which is difficult to meet the needs of modern economic development. Taking bitcoin as an example, there is a contradiction between the upper limit of supply set by the system and the expanding social proction and commodity circulation. If it is widely used, it will cause deflation and inhibit economic development. This is also the root cause of the collapse of the gold standard
Fourth, private digital currency lacks a central regulation mechanism, which is difficult to meet the needs of the stability of the modern monetary system. The so-called "decentralization" without centralized issuing and regulating institutions is a common feature of private digital currency. If the private digital currency is generally accepted by the whole society, and the monetary authority is unable to stabilize the currency value through the central adjustment mechanism, it will not only cause economic fluctuations, but also shake the monetary system based on national credit[ 4]
fifthly, private digital currency brings challenges to anti money laundering, anti terrorist financing and capital control. Private digital currency is characterized by anonymity of transaction and free transnational flow of funds, which makes it easy for criminals to cover up the source and investment direction of their funds, and indivials to evade the regulations on the amount of foreign exchange and foreign exchange remittance [5], which brings convenience to money laundering, terrorist financing and capital control evasion< Sixth, private digital currency increases the difficulty of consumer protection. The price of private digital currency fluctuates greatly, market participants are almost not regulated, the security of users' funds is not guaranteed, and the transaction is not transparent. Therefore, private digital currency transactions are prone to fraud, theft and fraud. This not only causes the lack of protection of consumers' rights and interests, but also increases the difficulty of evidence collection and investigation by the regulatory authorities[ 6]
therefore, in order to deal with the impact of the rapid development of private digital currency on monetary sovereignty, monetary policy, financial risk and consumer protection, the monetary authorities clearly realize that the state should start to study the issue of central bank digital currency as soon as possible. In the future, with the support of national credit, the digital currency of the central bank should continuously meet the requirements of the society for the use of money technology and become a widely recognized settlement and payment method. Only in this way can the monetary authorities expand the use of sovereign currency and rece the impact of private digital currency on the monetary system and the entire financial system Transferred from NetEase Finance)
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