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At the beginning of 2020, the sudden new crown pneumonia epidemic has had a huge impact on my country’s economic and social development, and at the same time strengthened the “home economy”, which has brought greater development opportunities for various “contactless” payment tools, and even more The development of legal digital currency brings new opportunities.
The Bank for International Settlements in 2020 released a survey report on the digital currencies of central banks of various countries. Six countries including Ecuador, Tunisia, Senegal, Marshall Islands, Uruguay and Venezuela have issued central bank digital currencies, and 80% of central banks are conducting relevant research.40 % Of central banks have moved from the concept research stage to the experimental or proof-of-concept stage, and 10% of the central banks have launched pilot projects, which has formed a trend of global issuance.
The People’s Bank of China started research on legal digital currency as early as 2014 and has been in a leading position. China’s legal digital currency (DC/EP) has five major advantages: solid credit endorsement, huge user base, solid user habits, leading theoretical framework, and RMB internationalization. In 2019, the People’s Bank of China basically completed the top-level design, standard formulation, function research and development, and joint debugging and testing of legal digital currency. In 2020, starting from April when the new crown pneumonia epidemic was brought under control in China, DC/EP began a small-scale pilot work.
New opportunities for China’s legal digital currency in the post-epidemic period
First, the epidemic will increase public awareness and acceptance of legal digital currencies. During this special period, more people tend to “shop online” and use “non-contact” electronic payment methods, and cut off the spread of the epidemic by reducing going out and gathering, reducing the use of banknotes and coins.
According to the “Overall Operation of Payment System” data released by the People’s Bank of China, my country’s mobile payment business volume maintained a growth trend in the first quarter of 2020. The business volume processed by the network platform reached 88.441 billion transactions, a year-on-year increase of 16.65%; the total amount was 63.63 trillion. Yuan, an increase of 16.29% year-on-year, was not significantly affected by the epidemic. It can be said that after the rise of Internet finance in 2013, the popularization of various third-party payments (WeChat Pay, Alipay, etc.) provided the basic conditions for the rise of the “home economy”. Online payment transactions not only facilitate users, but also save operating costs of financial institutions. The popularization of mobile payments has played a role in cultivating user habits for the promotion of legal digital currencies.
In the future, legal digital currency can not only meet the needs of users for “contactless” payment, but the endorsement of national credit, strong anti-theft, and traceability make it more secure, with near-zero transaction costs and low latency. Timeliness and wide range of applications also make legal digital currency more convenient. In addition, China has a good user base that accepts legal digital currency. At the end of December 2019, the number of Internet users in my country reached 935 million, and the national Internet penetration rate reached 64.5%. Among them, mobile Internet users reached 897 million. At present, 99.3% of Internet users use mobile phones to access the Internet. China has entered the era of mobile Internet. The community provides a broad space for the promotion of legal digital currency, and a large number of mobile applications also provide more sinking scenarios for legal digital currency.
Second, legal digital currency can complement the shortcomings of the existing payment system and better meet the payment needs of the post-epidemic era. At present, payment in the digital economy mainly relies on two major platforms, Alipay and WeChat Pay. They have each established a diversified life service ecosystem, covering most of the daily transaction scenarios required by users. The replacement rate of non-cash payment tools such as mobile payment for cash is increasing. Come higher. However, the current third-party payment platform is a corporate payment system rather than a statutory payment system. Users need to bear the handling fee and installation cost of scanning equipment. There are transaction barriers between platforms, and potential financial risks such as account theft and fraud are inevitable.
At the same time, third-party payment cannot fully meet the public’s demand for anonymous payment, and the central bank, unlike commercial institutions, will not profit from users’ personal information, and the risk of privacy leakage is relatively small. The legal digital currency has traceable anonymity, which can not only meet the needs of anonymous payment, but also supervise when necessary to prevent fraud, money laundering and other issues, and more respect for user privacy. More importantly, legal digital currency can open the digital payment between the company’s corporate departments and government departments, open the digital payment scenario, and make up for the lack of public payment in third-party payment tools.
In addition, third-party payment relies heavily on the availability of the network and the integrity of the payment equipment. Previously, there have been incidents in which the WeChat payment and Alipay system crashed and affected the normal payment of users, and the existing technology can only support third-party payment to achieve “single offline payment”. It is limited to use in online transaction scenarios. The legal digital currency is based on a special design and realizes value transfer through a digital wallet. In addition to online payment and payment like online banking, WeChat payment, Alipay, etc., it can also perform peer-to-peer transactions without relying on the network to achieve cash-like ” “Dual offline payment” can better meet the future development of the digital economy and better respond to payment needs in emergencies such as epidemics and natural disasters.
Third, the epidemic has promoted the further development of the digital economy, and the digital economy will surely give birth to legal digital currencies. Digital currency is the most important financial infrastructure in the digital age. Powers in the digital economy call for the birth of digital currency. According to statistics, the scale of my country’s digital economy has reached 35.8 trillion yuan in 2019, accounting for 36.2% of GDP, making China a recognized digital economy power in the world. The new crown pneumonia epidemic has further accelerated the development of the digital economy, which is becoming a new engine of national economic development. The digital economy will inevitably give birth to legal digital currency, and legal digital currency will empower the digital economy to achieve stability.
Legal digital currency can hedge against the interference and impact of virtual currency and digital currency issued by private institutions, is conducive to the stability of financial order, and eliminates the negative impact of non-statutory digital currency on the digital economy. Moreover, the convenience, security, and stability of legal digital currency are also consistent with the speed and efficiency pursued by the digital economy. It can promote the integration of the digital economy and the real economy. The two complement each other and promote each other to promote high economic quality. development of.
Fourth, the legal digital currency in the post-epidemic period can enrich monetary policy tools and better assist economic recovery. In the post-epidemic era, helping the economy to emerge from the haze of the epidemic as soon as possible and embark on the path of recovery has become an important task for the central bank. The central bank will adopt innovative mechanisms such as big data analysis and artificial intelligence in the design of legal digital currency, which will make it possible to collect real-time data such as currency creation, bookkeeping, and flow, and conduct in-depth analysis through big data and other technical means to provide currency To provide more reference for investment, monetary policy formulation and implementation, to strengthen the effectiveness of policies such as deposit reserve ratio and interest rate, and to make the transmission process of my country’s monetary policy smoother.
At the same time, after the issuance of legal digital currency, convenient online settlement, extremely low payment costs, and fashionable payment experience will surely promote consumer impulse, thereby driving economic growth; it can also contribute to the vast number of small and micro businesses by leveraging its information and technological advantages. Enterprises and individual merchants provide financing services with lower thresholds, lower costs, and more flexibility, with tangible “hard core” measures to promote the resumption of work and production and the market, help “six stability” and “six guarantees”, and accelerate economic recovery pace.
Fifth, the world economic development in the post-epidemic period expects convenient cross-border payment tools, and legal digital currencies have “all the conditions needed for a world currency.” The digital currency issued by the Central Bank of China is legal, stable, and anchored. In many respects, it has more advantages than digital currency issued by private companies (such as Libra issued by Facebook) and other payment tools, especially in that it is issued by the central bank. And management, endorsed by national credit, with low default risk, is a “true digital currency”. Since DC/EP can be freely exchanged with RMB 1:1, it can be connected to the existing currency systems of sovereign countries in the world, and the process of RMB internationalization can be further promoted through cross-border payments.
The current international monetary system dominated by the U.S. dollar still has many drawbacks. The over-issued U.S. dollar has brought “negative externalities” to other countries in the world, especially developing countries, and SWIFT, the world’s most important payment transaction system, is also owned by the United States. Leading, China has the need and ability to build a new payment system network to break the monopoly of the US dollar, and legal digital currency will be an important magic weapon for the RMB’s internationalization of “curving overtaking”. You can use channels such as “haitao” consumption, investment and lending from “Belt and Road” countries to open up overseas markets, and you can also consider cooperating with companies that are already engaged in cross-border payment business (such as Alipay) to promote legal digital currencies in overseas markets The application of renminbi will help the internationalization of the RMB.
Sixth, the central bank has already begun to develop legal digital currency, which has a first-mover advantage. China is the world’s largest mobile payment market, and it is in a relatively leading position in terms of the scale of mobile payment users and transaction scale, as well as the penetration rate. The substitution effect of “card payment” and “scan code payment” on cash has become increasingly obvious. Accelerate the pace of research on legal digital currency, prevent the impact of “shadow currency systems” such as Bitcoin and Libra on the existing system, improve the operating efficiency of the payment system, and promote the improvement of economic digital governance.
The People’s Bank of China began research on legal digital currencies in 2014. The Digital Currency Research Institute of the People’s Bank of China was formally established in January 2017. As of April 2020, 22, 65, and 22 digital currencies and related content have been submitted. 43 patent applications, covering the entire process of issuance, circulation, and application of digital currency, have formed a complete industrial chain, have completed technical reserves, and have the conditions for landing.
Actively and steadily implement legal digital currency
First, further strengthen the publicity of legal digital currency, summarize pilot experience, and expand application scenarios. At present, my country’s legal digital currency is steadily advancing in accordance with the principle of gradual and orderly progress, and small-scale pilot projects have been carried out in many places. However, the public’s understanding of legal digital currency is not comprehensive enough. Some people equate digital currency with “speculation” and speculation. Some institutions even use the name of the central bank to launch so-called “legal digital currency products” for fraud and pyramid schemes. .
Before the issuance of legal digital currency, multimedia methods should be used to popularize more legal digital currency knowledge to the public and create a good use environment. At the same time, it is necessary to examine the use effect of the pilot area, pay attention to market demand, summarize accumulated experience, track and investigate the impact of legal digital currency on the existing system, ensure the convenience, safety, and efficiency of legal digital currency use, and increase market acceptance. And gradually spread to the whole country. In addition, the issuance and pilot work of statutory figures in the public domain must be launched in due course.
Second, follow the development trend of the digital economy, establish a new regulatory model of legal digital currency, and accelerate the construction of supporting systems. At present, the digital economy is profoundly affecting all areas of the national economy. In the future, legal digital currency will interact with the digital economy to promote the integration of new technologies, new business formats, and new models, and promote high-quality economic development. The central bank should speed up the construction of a legal digital currency supporting system, and seek a balance between the government and the market, security and efficiency, innovation and regulation. Establish a new type of supervision method based on traditional supervision methods, formulate a series of special laws and regulations for legal digital currency, support the corresponding digital financial supervision system in the whole process of issuance, circulation and application of legal digital currency, and develop research and development digital currency issuance National standards to combat illegal digital currency speculation, provide complete legal protection for the new currency system, and promote the sustainable and healthy development of legal digital currency and the digital economy.
Third, strengthen theoretical and empirical research, enhance the effectiveness of monetary policy, and help economic recovery. The legal digital currency will make the central bank’s measurement of money supply, circulation speed, currency multiplier and other data more accurate, thereby enhancing the effectiveness and accuracy of monetary policy. In the legal digital currency pilot area, big data should be used to strengthen statistical monitoring, and relevant data should be used to carry out theoretical model construction and empirical research. It is also possible to conduct comparative studies between pilot areas and non-pilot areas, and it is also possible to conduct international comparative studies to summarize legal figures. The advantage of currency issuance lays the foundation for comprehensive promotion and establishment of a policy framework and theoretical basis as well as economic recovery after the epidemic.
Fourth, participate in the global governance of digital finance, strengthen international collaboration, and master the dominance and voice of legal digital currency. With the development of Internet technology, it is entirely possible for digital currency to break through the shackles of the existing currency system and become a “world currency”. Digital currency competition is at the core of the global digital economy competition in the future. It is necessary for my country to “curve overtaking”, study the realization path of RMB internationalization in the digital currency era, and explore the feasibility of issuing China-led global digital currency that can be used across borders Sex. In addition, in the construction of the global digital financial system, my country should actively participate in and fight for the right to speak, cooperate with other countries that are developing legal digital currencies, participate in the formulation of uniform international regulatory standards for legal digital currencies, master intellectual property rights in key areas of digital technology, and strive to Establish global competitive advantages in key areas of the digital economy.
Fifth, make good use of the first-mover advantage, seize the first track, and speed up the issuance of legal digital currency without stopping. Currency is inherently monopolistic. The issuance and circulation of digital currency will bring about tremendous changes and impacts on the existing international monetary system, clearing system and financial system. Therefore, the right to issue and control digital currencies will become a “new battlefield” for competition among sovereign nations. China’s issuance of legal digital currency has many advantages and faces many opportunities. It should accelerate to seize the first track, give full play to the network effect, and win the first opportunity.