Technological innovation is rapidly changing the financial industry. The occurrence of major events such as the intensive rectification of the big data risk control industry, the emergence of digital currency, and the integration of face payment into financial technology pilots, all herald the deep integration of finance and technology, and the future of complementarity.
Facing 2020 and even the next 10 years, finance and technology are bound to have more in-depth integration. For example, blockchain technology will develop rapidly in the next 10 years, playing the role of an Internet passport, and will promote the paperless process of currency and the landing of other application scenarios in the financial field.
The industry predicts that China’s financial technology-related market will exceed 12 trillion yuan in 2020.
China’s economy is still within a reasonable range
At present, the world economy is under downward pressure. Everyone has read China’s economic data recently and there is also some downward pressure. But our overall judgment is that China’s current economy is still operating within a reasonable range.
At present, China’s macroeconomic policies, especially fiscal and monetary policies, have relatively large room to cope with downward pressure.
As everyone knows, taking monetary policy as an example, our current interest rate level should be a moderate level of interest rates, and the level of the statutory deposit reserve ratio should also be said to leave plenty of room for future macro policy adjustments.
The recent trend of monetary policy is to cut interest rates and restart QE. China is a large economy. Our monetary policy is mainly to serve the domestic economy. Therefore, we decide that our monetary policy is mainly based on ourselves, taking into account the domestic economic situation and price trends for pre-adjustment and fine-tuning.
China’s economy is still in a reasonable range, and prices are also in a relatively moderate range. During the transformation and upgrading, we encountered some structural problems, which were mainly resolved through supply-side structural reforms.
Based on comprehensive analysis of China’s domestic situation and international background, we believe that China’s monetary policy should remain firm and adhere to a steady approach. We must stabilize the current situation, that is, we must strengthen counter-cyclical adjustments, and maintain the growth rate of our broad money M2 and the scale of social financing and the growth rate of nominal GDP to be roughly equivalent and roughly matched, and we must resolutely refrain from “overwhelming flooding.”
We must also pay attention to maintaining the stability of our leverage ratio so that the debt level of the entire society is at a sustainable level. At the same time, we must also consider the long-term, that is, we must increase structural adjustments, make great efforts to clear the transmission mechanism of monetary policy, reduce corporate financing costs through reforms, and promote high-quality economic development.
Central bank digital currency concept and architecture
1 In order to meet the high concurrency performance of the retail level, the pure blockchain architecture cannot meet the requirements.
2. The central bank’s digital currency adopts a two-tier operating system, with the central bank as the upper layer and commercial banks as the second layer.
3. The two-tier operating system will not change the relationship between creditor’s rights and debts of currencies in circulation. In order to ensure that the central bank’s digital currency does not exceed the issuance, commercial institutions pay 100% of the reserve to the central bank.
4. No technical route is preset. From the perspective of the central bank, whether you are using a blockchain or a centralized account system, electronic payment or so-called mobile money, the central bank can adapt to any technical route you take.
5. DC/EP must adhere to a centralized management model.
6. The central bank’s digital currency design at the current stage focuses on M0 substitution instead of M1 and M2 substitution. No interest is calculated for cash, which will not cause financial disintermediation, and will not have a big impact on the existing real economy.
7. Libra is also mortgaged with so-called 100% reserve assets, but it does not limit itself to M0, and there may be over-issue currency.
8. The central bank digital currency can be loaded with smart contracts.
Blockchain technology will play the role of internet passport
Blockchain may be an important development direction of financial technology in the future, and it is also the third-generation product of network technology.
“Blockchain is used in finance, such as risk management for small and micro enterprises. Supply chain finance can be used to increase trust among affiliated companies. Digital currency is also blockchain technology. Using digital currency can greatly reduce foreign trade. Transaction costs and improve efficiency.”
At present, the application scenarios of blockchain technology are mainly focused on two directions: digital currency and digital people’s livelihood. No matter which direction, it points to a trend: the digital economy.
The reason why blockchain technology is used in digital currency is mainly because it was previously used in bookkeeping technology. But in the future, it will be used for comprehensive government management, cross-departmental collaboration, and cross-functional public services.
Take the blockchain as an important breakthrough for independent innovation of core technology!
Digital currency is an alternative currency in the form of electronic money. It is a legal tender and must be issued by the central bank.
Both digital gold coins and cryptocurrencies belong to digital currencies. It is not a virtual currency on the Internet because it is not only limited to virtual space, but is often used for real goods and services transactions.
In daily use, what is the difference between digital currency and bank transfer payment?
Industry insiders analyze that the digital currency launched by the central bank is a national sovereign currency and a currency based on the digitization of the RMB.
This is a piece of data generated by a complex algorithm, which contains blockchain and encryption technology to make it unique.
Alipay and WeChat Pay are not digital currencies, but payments based on electronic accounts.
It needs to have physical currency offline as a counterpart to the current “payment-transfer-receipt” pattern that is done through third-party payment.
What digital currency wants to achieve is “decentralization”, that is, cancel the transfer link and directly transfer the money from the payer’s account to the payee, reducing the payment cost in currency circulation.
Central bank digital currency will be an important investment theme in 2020
(1) As more and more institutions and funds enter the cryptocurrency field, we expect the market size of stablecoins to continue to expand in 2020.
(2) With the further development of public chains and other infrastructures, as well as the implementation of various applications and financial services on the chain, in the long run, competition among various stable coins may start from the application scenarios.
(3) Achieving security and credibility under regulatory compliance has become the primary issue that needs to be resolved in the development of stablecoins.
(4) Once governments begin to accept or issue central bank digital currencies, the competition from central bank digital currencies outside the currency circle will inevitably reshuffle the existing stable currency structure.
From an industry perspective, stablecoins have clearly become a bridge between the digital world and the real world. With the entry of the central bank’s digital currency, the industry will also usher in a reshuffle!
The next frontier of China’s Internet will appear on the B-side, and technology companies’ empowerment of the B-side and service C-side will become the mainstream business model. At present, the platform ecology formed by the development of financial technology has begun to take shape.
