Digital currency and RMB internationalization
the so-called digital currency is the RMB with monetary nature issued by the central bank. The reason to accelerate the promotion of digital RMB is to make the digital RMB form an international financial pattern, improve China's financial efficiency, and bring new development opportunities in the process of development
when it comes to digital currency, you may immediately think of virtual currency such as bitcoin. In fact, there are differences between digital currency and virtual currency. Those virtual currencies are affected by too many factors, and there will be inflation or very large fluctuation of stocks. Now, digital currency has a real purchasing nature, It is the same as paper currency. It only exists in the form of paper, and the other is in the form of numbers. We must not compare it with the wallet in Alipay or WeChat, because every digital currency has its own banknote code, that is, it can trace its source and use.
in addition to the above disadvantages and advantages, there will be no inflation in the process of issuing digital currency. But it's still in the testing stage, so we'd better use paper currency or some apps to pay first
At 8:00 on October 11, Shenzhen & lt; Enjoy Luohu digital RMB red envelope & quot; At the end of the appointment, the system successfully completed the pilot appointment registration, which is an important step in the development process of digital RMB. Adrian said: & lt; China's digital currency pilot leads the world, and the IMF pays close attention to the pilot situation of China's digital currency in some urban areas& rdquo; From the perspective of monetary statistics, the central bank's digital currency belongs to the category of M0, that is, cash, not M1 or m2. Therefore, he does not think it is necessary to worry about the impact on banks in the initial stage{ RRRRR}
overall, the impact of digital RMB on China's financial system will be all-round, and the development of China's digital system will usher in a new era
The digital RMB red envelope of 10 million yuan issued by Shenzhen city has brought the development of e-money back to the people's vision
in fact, since April 2020, small-scale pilot projects of digital RMB have been carried out in Shenzhen, Cheng, Suzhou and xiong'an, and the pilot scale will be expanded to 28 provinces and cities in August 2020
as a socially recognized "super outlet", in addition to the high investment of digital currency related enterprises, its impact on the financial market is also of great research value
Policy evolution of the development of digital RMBas early as 2014, the central bank has concted research layout on digital RMB, and discussed the development framework of digital RMB with major international financial institutions and research institutions in the 2016 digital currency seminar
after six years of development, China has initially developed the "pbctfp blockchain platform" and continuously promoted the pilot activities of digital RMB. It can be predicted that as today's technology and policy outlet, digital RMB will have excellent development prospects and extremely fast development speed in the next few years
Figure 1: Policy Evolution of digital RMB
with the improvement of China's national strength, digital RMB provides an opportunity to establish a "new system of RMB cross border settlement", which can promote RMB payment activities around the world and realize the internationalization of RMB
Hello, the replacement of paper-based RMB by digital RMB is basically certain. Just as the era goes from entity to e-commerce, RMB also goes from offline to online. Its function is exactly the same as paper money, that is, the digital version of paper money
at present, China's digital currency is a leading technology, which is bound to accelerate its digital currency construction in the short term, in order to find the gap with DCEP. However, DCEP can ultimately promote the nationalization of RMB, still depends on the steady growth of domestic economy and the international circulation ability of RMB itself, not only on the digital technology of RMB, but also has a long way to go
CBDC. How to participate? Including the following two cases, let's take Kazakhstan as an example. The first is that Kazakhstan can issue RMB denominated Kazakh government bonds. The issuer is Kazakhstan, but the RMB denominated bonds are sovereign bonds for Kazakhstan, which can also be sold to the Central Bank of China in exchange for CBDC. The second is that Kazakhstan issues treasury bonds denominated in its own currency, which are issued by Kazakhstan and priced in its own currency. This method is the easiest for Kazakhstan, because this is their own national debt, which is sold to the Central Bank of China, which gives it CBDC. The similarities between the two lie in that they both sell treasury bonds to the Central Bank of China, but the issuers of treasury bonds are not the same, and the pricing currencies of treasury bonds are not the same, so the requirements for Kazakhstan are not the same. In theory, these ways can be used as a political tool to influence and regulate the relationship between the Chinese government and Kazakhstan<
4 digital currency will become the biggest magic weapon of RMB internationalization
China is now facing the biggest challenge, in terms of currency, in fact, the internationalization of RMB. The monetary settlement system based on US dollar has brought great problems to the decision-makers outside the US dollar. The best way to rece the status of US dollar is to replace us dollar with a global digital currency to end the dominant advantage of US dollar. The Chinese version of CBDC is likely to become the biggest magic weapon to promote the internationalization of RMB and end the hegemony of US dollar. The opportunity for RMB internationalization lies in the trend of de dollarization. Therefore, we need friendly countries other than US dollars to participate in China's digital currency. Taking the lead in the use of digital currency in block trading and financial settlement to bypass the restrictions on trading in US dollar will certainly realize the development of de dollarization and form a new currency trading system dominated by China and participated by many parties. So how to achieve it? In essence, it is to transfer benefits, so that non dollarized friendly countries can participate in the issuance process of CBDC, and even share the seigniorage of RMB. It is the most effective magic weapon to embody the spirit of democratization and benefit sharing of blockchain and bitcoin in the design of sovereign currency, which is also the most practical way to realize the internationalization of RMB.
1、 What is digital currency RMB
with the development of Internet technology, especially blockchain technology, many so-called & lt; Virtual currency;, Such as bitcoin and Wright currency, which are controversial in recent years
as a substitute for M0 (cash in circulation, i.e. cash in circulation outside the banking system), the difference between the central bank's digital currency and the virtual currency such as bitcoin is that bitcoin is decentralized, while the digital currency to be launched by the central bank is centralized
the central bank's digital currency is a legal digital currency issued by the central bank based on national credit, which is exactly the same as RMB cash and is equivalent to cash{ RRRRR}
it can be predicted that the era of digital RMB is coming. For commercial banks and other financial institutions, digital currency will lead to more innovations such as digital credit, digital assets and digital liabilities. In addition, the central bank can improve the efficiency of monetary operation monitoring and enrich monetary policy means after the issuance of digital currency
In addition, the issue of central bank's legal digital currency will make it possible to collect real-time data such as money creation, bookkeeping and flow. After data desensitization, it will conct in-depth analysis through big data and other technical means, so as to provide a useful reference for money supply, formulation and implementation of monetary policy, and provide a useful means for economic regulation In the short term, the introction of digital currency has little impact on the exchange rate; Digital RMB & quot; At present, it seems that the aim is to partially digitize the currency in circulation (so there will be zero interest rate compensation, 100% reserve requirement and limited weakening of financial intermediaries, also known as & lt; Disintermediation, Considering China's current capital account restrictions (especially the restrictions on capital outflow), the introction of digital currency is unlikely to have a great impact on the trend of RMB exchange rate in the short termthe development of Sino US relations, portfolio capital flow, yield advantage and valuation are still the driving factors for RMB. Due to the outbreak of the second wave of the epidemic, there was an outflow of funds from the United States. This should also boost market confidence in the RMB in the short term
2、“ Digital RMB & quot; It is a milestone of RMB internationalization; Digital RMB & quot; The design of settlement technology is very complex and becomes ubiquitous (by making full use of the increasing popularity of mobile phones and Internet applications in China and the inclusion of RMB in the IMF's special drawing rights basket), which may promote the internationalization of RMB and the diversification of the current US dollar centered International Monetary System in the long run
conclusion: when the central bank issues digital currency, it focuses more on domestic factors. On the one hand, it is the trend of the times; on the other hand, it has many advantages. And the internationalization of RMB, more often, is a matter of course. The introction of digital currency by the people's Bank of China is a major change in the monetary system, both domestically and internationally
as for the regionalization and internationalization of RMB, we can graally seek monetary cooperation within the framework of ASEAN 10 + 1 pseudo economic cooperation. We can fix their respective exchange rates and float jointly with foreign countries. When the time is ripe, we can use strong RMB to replace other currencies or take RMB as the dominant currency to create a single currency and realize monetary unification. Secondly, it can expand to ASEAN 10 + 3 on the basis of ASEAN 10 + 1 and unite with Japan and South Korea. At that time, RMB will really grow into an international currency with far-reaching influence, just like the euro to Europe and the US dollar to America
secondly, in terms of monetary function, we should promote the internationalization of RMB in three steps, that is, adhere to the three-step strategy of RMB settlement currency, RMB investment currency and RMB reserve currency. In this process, we should steadily promote the process of RMB capital account convertibility, actively and steadily carry out offshore financial business, and graally implement the target area management of exchange rate
historically, which country's currency becomes a valuation currency in international trade and capital flow will take the initiative in international economic transactions. Take capital export as an example. Among the three capital flow centers in the world, when Britain and the United States were capital exporting countries, they all used their local currency as the valuation currency, while after the 1970s, when Japan was the capital export center, they used US dollar as the valuation currency. result; Japanese enterprises and financial institutions are very passive in dealing with the exchange rate risk in the foreign exchange market. When the yen rose sharply, these enterprises and financial institutions suffered huge losses. This is considered by many people as one of the important reasons for Japan's economic recession for more than a decade
for a large economic country, if the local currency can not comply with the trend of domestic trade growth and become the pricing currency of the open international financial market and trade, then the national currency will not become one of the major international reserve currencies. This means that the domestic currency has not obtained the international currency status which is relative to the total economic volume and the total trade volume. In order to deal with the macro financial risk of exchange rate fluctuations, the government must hold a large number of foreign exchange reserves. In today's international monetary system, US dollar and euro are the main pricing currencies in the international financial market, so US dollar and euro have become the main reserve currencies in the world. Correspondingly, the foreign exchange reserves of the United States and the European Union are very small. By the end of June 2007, the value of foreign exchange reserves of the United States was only US $41.5 billion, and that of the European Central Bank was only 41.4 billion euros. In contrast, in Asia, although Japan and China are among the top countries in the world in terms of economic aggregate, neither the Japanese yen nor the RMB has gained the status of an important pricing currency in the international financial market. As a result, China and Japan have the largest foreign exchange reserves in the world
with the development of China's economy, it should be our long-term goal to take corresponding strategies to graally integrate RMB into the international reserve currency system, break the current reserve currency pattern of the western world dominated by US dollar and euro, and promote the construction of multipolar reserve currency system. In this process, China should adopt a consistent graal strategy to promote the internationalization of RMB through the regionalization of RMB. At the same time, we should develop an open international asset market valued in RMB and provide more choices of RMB financial assets for foreign investors. Only after such a stage can RMB really gain the status of reserve currency, and we can get rid of the trouble of worrying about the amount of foreign exchange reserves.
The digital currency issued by the central bank can indeed increase the process of RMB globalization to a certain extent, which is positive and powerful for the current global currency diversification. However, to replace the current U.S. dollar as the mainstream or the most hard currency in the world, even the digitized RMB needs a considerable part of the time cycle, which we need to maintain a very clear understanding
plus the Chinese dollar are only a matter of time. But this time period may start in five or ten years. The road is tortuous but the prospects are bright. br />
The reason for China to accelerate the promotion of digital RMB is to protect the currency sovereignty and legal currency status, and lead the new international financial pattern
1
Bai Liang, executive vice president of digital assets research institute, said:
first of all, from the perspective of international competition, cryptocurrency represented by bitcoin and Libra (Libra) and other global stable currencies are trying to play the role of currency and finance. These cryptocurrency assets deal with transactions in a decentralized way, which will challenge a country's monetary sovereignty. The introction of digital RMB has the purpose of protecting currency sovereignty and legal currency status
secondly, from the perspective of the domestic financial environment, the introction of digital RMB is to adapt to the rapid development trend of mobile payment, at the same time, it also takes into account the inclusive nature of finance, to avoid the deepening of financial exclusion, and it is a public good to truly serve the majority of the people. Secondly, digital RMB can also identify and crack down on money laundering, tax evasion and other criminal acts to a certain extent, so as to ensure the stability of financial order
2. Lead the new international financial pattern
at present, legal digital currency is becoming a "new battlefield" in the competition among sovereign countries. The introction of digital RMB has a profound impact on financial and economic activities in the digital era
first of all, digital RMB helps to form a new international financial pattern and help RMB internationalization. To protect national currency sovereignty and legal currency status is the primary goal of digital RMB issuance
secondly, the introction of digital RMB helps to improve China's financial efficiency and optimize the allocation of resources. Ba Shusong, chief economist of China Banking Association, believes that legal digital currency can achieve a closer combination of monetary policy and fiscal policy. Through the smart contract with "conditional trigger mechanism", it can limit credit subjects and use scenarios, achieve accurate loan delivery, avoid capital idling, and achieve a more efficient macro-control system
thirdly, digital RMB brings new development opportunities for economic and financial activities based on digital technology. Bai Liang believes that digital RMB can become "data" from all aspects of issuance, circulation, storage, investment and cross-border flow, which has opened up the last mile for financial technology companies to use big data, blockchain, artificial intelligence, cloud computing and Internet of things to link and process these data
Digital RMB, abbreviated as "DC / EP", is the abbreviation of digital currency and electronic payment, which shows that digital RMB is not only a currency, but also an electronic payment tool. Instry insiders pointed out that when discussing digital RMB, we should first confirm that its basic attribute is currency, which is the composition and supplement of the existing legal currency system, and then it is a digital payment tool
Based on this, China's digital RMB system adheres to the basic principles of cash (M0) substitution, double-layer delivery and controllable anonymity
first of all, the Central Bank of China locates the digital RMB as M0 substitution, which is different from the decentralized characteristics of private digital currency. The issuance of digital RMB is managed by the central bank, and the issuer is the people's Bank of China
secondly, the double-layer delivery mechanism means that the central bank is responsible for the delivery and return of digital currency, but the central bank does not directly connect with consumers, but applies to the central bank for the exchange of digital currency through commercial banks, which provide the central bank's digital currency and corresponding services to the public
thirdly, from the perspective of payment data privacy protection, digital RMB realizes "controllable anonymity" based on encryption technology. Wu Tong, member of the academic and Technical Committee of digital assets research institute, introced that privacy protection technology can ensure the security of user data, avoid the disclosure of sensitive information, and not damage the usability; At the same time, it realizes the management of the use rights of the relevant data, ensures the traceability under certain conditions, and only the central bank can obtain the full amount of user identity information and transaction flow