The issuance of digital currency by central banks around the world is in full swing, and the pilot project of the Hainan Free Trade Port is a prelude to the battle for the global financial center.
Original title: “China expands CBDC pilot program, and the battle for global digital financial center cities accelerates”
Written by: Mori Goro
China’s digital renminbi pilot triggers a global digital currency sovereignty war
On April 27, Liande learned that Hainan, as the only region in the province to pilot digital renminbi, began to pilot applications in the entire region and in multiple scenarios. On the morning of the 26th, the use of digital renminbi in the traffic scene of Hainan Free Trade Port was officially launched.
The launch of the digital renminbi in the transportation scenario of Hainan Free Trade Port was supported and guided by the Haikou Central Branch of the People’s Bank of China, the Department of Transportation of Hainan Province, and Hainan Tourism Investment Development Co., Ltd., and jointly organized by the Hainan Branch of the Bank of China and Hainan Haiqi Transportation Group.
The person in charge of Bank of China Hainan Branch stated that the bank will continue to explore new bank-enterprise cooperation models with its extensive financial service platform and diversified product system, and integrate digital renminbi into the free trade port retail payment scenario, with “smart payment” And “mobile payment” helps our province optimize the financial business environment and empower the free trade port and smart Hainan for high-quality development.
The implementation of the digital renminbi is a global strategy. Hainan’s status as the financial and trade center of Asia has gradually become clear.
As the largest special economic zone in mainland China, Hainan is institutionally regarded as a special area for the comprehensive deepening of reforms of the Chinese economy and testing of the highest level of openness policies. The State Council of China and the Central Committee of the Communist Party of China formally issued the “Hainan Free Trade Port” on June 1, 2020 The “Overall Construction Plan” is expected to be initially completed in 2025, opening up a new economic highland in 2035, and becoming an international-level free trade port in 2050.
In fact, as early as the end of 2020, the second batch of digital renminbi pilot work was officially launched in Hainan, and Hainan became the only region in the whole province to pilot digital renminbi.
Currently, digital renminbi has pilot areas in Haikou, Qionghai, and Sansha, and users can use it in specific scenarios of the pilot. For example, on April 12, the Hainan branch of the Industrial and Commercial Bank of China conducted a pilot activity on Yongxing Island, Sansha City, and on April 17, the pilot activity of the Agricultural Bank of China Hainan Branch.
The digital renminbi’s tendency to break the pattern of the three major world currency systems in the United States, Europe and Japan has also gradually emerged.
Jin Wu, deputy inspector of the Haikou Central Branch of the People’s Bank of China, said that the digital renminbi is a legal currency in digital form issued by the People’s Bank of China. It is equivalent to banknotes and coins. It is a legal currency with national credit endorsement and legal solvency. No payer has the right to refuse to accept it.
The digital renminbi is a digital legal currency issued by the People’s Bank of China and guaranteed by national credit. It is an important symbol of the development of my country’s digital economy and a major manifestation of the new financial infrastructure.
At the 2021 Bank for International Settlements (BIS) Innovation Summit held on March 25, Mu Changchun, director of the Central Bank’s Digital Currency Research Institute: CBDC can guarantee currency sovereignty and the independence of financial policies .
The pilot work of the central bank’s digital renminbi has attracted worldwide attention since 2020. In addition to consumer pilot projects in Shanghai, Chengdu, Suzhou and other places, pilot projects for enterprise-level application scenarios were also disclosed at this summit.
JD Group pilots digital renminbi payroll and corporate payments
At the Digital RMB Special Exhibition of the 4th Digital China Construction Summit on April 25, JD.com demonstrated the digital RMB payroll and corporate payment for the first time.
This project is a strategic cooperation between the People’s Bank of China Central Bank Digital Currency Research Institute and JD Digital Technology on September 21, 2020.
Based on the digital renminbi project, jointly promote the R&D and construction of mobile basic technology platforms and blockchain technology platforms, and combine with the existing scenarios of JD Group to jointly promote the innovation of digital renminbi mobile application functions and the application of online and offline scenarios , Promote the ecological construction of digital renminbi wallet.
Among the three scenarios implemented this time, one is enterprise-level payment, the second is enterprise payroll, and the third is offline payment.
Liande understands that the corporate payment partners in this experiment are Unisplendour Digital and Chongqing New Goodaymart, and the experiment time is January 2021. This time, it also disclosed the enterprise procurement scenario solution “E-Enterprise Pay” provided by JD.com, and the inter-bank settlement function has also been verified.
In this disclosure, the second digital renminbi payroll is at the forefront. JD.com issued the first batch of digital RMB salaries to some employees based in Shanghai, Shenzhen, Chengdu, Changsha, and Xi’an.
Because as early as April 2020, the offline pilot project of the central bank’s digital currency has been launched nationwide, and the digital renminbi received by employees can also be directly paid offline.
The development of enterprise-level user services for digital renminbi has played an important role in promoting the development of digital currency. Currently, companies that independently issue digital currencies are paying salaries, enterprise-level settlements, and offline payments for individual users worldwide. In full swing.
The World Central Bank’s digital currency process accelerates
In January 2021, the Bank for International Settlements conducted a survey of central banks in 65 countries around the world. The report showed that 86% of central banks were exploring the advantages and disadvantages of CBDC, an increase of nearly 53 percentage points from 33% four years ago.
60% of the central banks surveyed have already launched their own CBDC projects, and more and more central banks are preparing. 20% of central banks stated that they can issue CBDC within 6 years. At the same time, the report concludes: 20% of the world’s population is expected to hold CBDC within 3 years.
In order to counter the hegemony of the US dollar, emerging countries are also actively deploying. Liande understands that the central bank’s digital currency plans that currently have definite news mainly include:
The Central Bank of the Bahamas has started to issue the digital currency Sand Dollar on October 20, 2020, which is also the world’s first central bank digital currency recognized.
On October 28, 2020, the Director of the Central Bank of Cambodia Chia Serey announced that Bakong plans to complete the trial operation and has issued the digital currency “Bakong Coin”.
In November 2016, the Monetary Authority of Singapore (MAS) cooperated with R3 to introduce the Ubin project.
The Bank of Japan started its digital yen project on April 1, 2021, and is expected to end the first round of pilot projects in March 2022.
In the euro area, Switzerland , which is financially developed, has a USC project aimed at bank transfers , which is led by UBS. UBS (English UBS) is committed to providing financial consulting services and solutions to wealthy individuals, institutional and corporate clients around the world, and private clients in Switzerland.
UBS Group is well-known for its strict confidentiality policy on customer information and bank confidentiality culture. UBS has two headquarters, located in Zurich and Basel, Switzerland; and as the world’s largest Swiss banking institution, UBS has offices in major financial centers around the world.
If UBS wants to eat the upstream market of banks, it is also a very powerful player in the Eurozone from the perspective of market share.
The Swedish Central Bank (Sveriges Riksbank), the central bank’s digital currency project e-krona plan launched in 2018, is also very loud. Since 2019, the Riksbank has invested 50 million Swedish kronor in this technology research project every year.
On April 9, 2021, Mithra Sundberg, head of Riksbank’s digital business pilot department, said in an interview with a reporter from Fortune Magazine,
“We hope to update the offer in terms of payment methods, and we hope to find our role in this new world.”
At the same time, the Riksbank is preparing to issue a central bank digital currency against the Swedish Krona. However, Mithra Sundberg stated that the e-krona plan has no intention of competing with Sweden’s mobile payment system, nor will it have an impact on the existing financial system. It seems that it has adopted a policy of appeasement.
Last week, Riksbank released the test results of the first phase of its research, verifying the application of blockchain among private companies.
In the next phase, Riksbank will expand its participants and select some commercial banks and other online payment companies to test the application of e-krona in retail and other scenarios.
The final feasibility of the e-krona plan will be piloted and verified in November 2022. Riksbank is taking this opportunity to improve the construction of its digital currency system so that it can be successfully introduced after the government makes a decision.
However, the historical significance of this pilot project of the Hainan Free Trade Port lies in the competition for the next-generation financial center. The popularization of digital currency is a foregone conclusion, and the changes it brings will undoubtedly subvert the existing financial system. As the first pilot city of a free trade zone, Hainan will surely emerge in the international financial market.
The battle for the financial center city
Currently, the world’s three recognized international financial centers are New York, London and Shanghai. The former Tokyo has fallen behind.
In the comprehensive economic measures summarized in December 2020, the Japanese government has proposed policies that will realize the realization of an international financial center, promote relaxation of restrictions, and attract overseas talents.
The newly appointed Prime Minister Naoto Kan also stated that he is striving for another financial sub-center in Japan. He will also set up the Digital Industry Agency under the Ministry of Economy, Trade and Industry in September this year. Cabinet Minister Taku Hirai will also be the Minister of Digital Reform.
Since January, the Japanese cabinet has been recruiting talents to prepare for the construction of the Digital Industry Agency, attracting 1,500 resumes.
The latest preparations show that the new Digital Industry Agency will guide the headquarters of the Bureau of Land, Infrastructure, Transport and Tourism, the Bureau of Economy, Trade and Industry, the Ministry of Culture, the Sports Bureau, and the People’s Insurance Bureau to ensure that Japan will not fall off the “2025 cliff.”
This is because a report submitted by the Bureau of Economy, Trade and Industry recently showed that Japan’s digital transformation has not been smooth. If this continues, Japan’s annual economic loss will be as high as 12 trillion yen in 2025.
The Governor of Tokyo, Yuriko Koike, at the “International Financial City Tokyo” Visionary Symposium held at the end of November 2020, emphasized that “in order to establish the status of an international financial city, now is undoubtedly the last opportunity.”
Osaka, Japan’s second largest city, is also actively striving for it. As mentioned in the previous article “International Financial City Conception” in Japan: Osaka may become a financial sub-center by taking advantage of the digital economy, Osaka has been applying for the title of super city.
In November last year, the Governor of Osaka Yoshimura Hirofumi announced that a government-private cooperation promotion department would be established within this year, and preparations for applying for the “International Financial City” will be initiated. Mainly take advantage of Osaka and strive to become a sub-financial center second only to Tokyo in the financial field.
With the steady advancement of the IR business, Japan’s comprehensive medical casino entertainment super service area, the first strong candidate is Osaka Yumeshima Island, which is very similar to Hainan Island.
Because the site of the 2025 World Expo is located here, Osaka is very favorable. Although the new crown may cause a retreat, the full opening of Osaka’s comprehensive leisure and entertainment city is still scheduled to be around 2028.
The G20 summit in Osaka is held, bringing Osaka an international aura, and the 2019 conference of Ethereum is also located in Osaka, bringing vitality to Osaka.
However, with the seriousness of the epidemic, Osaka’s economic development has been greatly impacted, and the hotels that previously hosted the G20 summit have also been poorly closed.
Although Japan continued to shine on the world stage from 1960 to 1990, Tokyo was also the undisputed Asian financial center at the time, but with the backwardness of information technology, Japan gradually withdrew from the stage of history. The digital currency trading market before 2017 was also a well-deserved leader.
However, due to the occurrence of the Coincheck case that reversed the digital currency trading industry, Japan is also daunted in this field.
Coupled with the Bank of Japan’s own attributes as a commercial bank, the digital yen issuance plan promoted by the government has been disappointing. Several major cities in Japan and even Tokyo have no way to win this digital war.
