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Reuters, Shanghai, Oct 25: Mu Changchun, director of the Digital Currency Research Institute of the People’s Bank of China, said on Sunday that China should adhere to central bank supervision by pushing forward the digital renminbi, which will help to resist the erosion of crypto assets and global stablecoins and will avoid currencies. The right of distribution is set aside.
He pointed out at the 2020 Bund Summit that in the process of adhering to central bank management, it is necessary to coordinate the management of the digital renminbi issuance quota, ensure 100% readiness and prevent over-issuance; at the same time, it is necessary to formulate unified business standards, technical specifications, security standards and applications. Standards to achieve interconnection between designated operating agencies and avoid payment barriers.
“Under the centralized administration system, the People’s Bank of China can prevent and combat illegal and criminal activities such as money laundering and terrorist financing, and effectively maintain financial stability.” Mu Changchun explained the central bank’s reasons for centralized supervision of digital currencies.
According to him, the centralized management of the digital RMB can realize the payment and settlement, increase the turnover rate of trading funds, solve the liquidity problems of small and medium-sized enterprises, including financing difficulties and high financing, and improve the efficiency of the implementation of monetary policy; It is also beneficial for breaking down the barriers of retail payments and market segmentation to avoid market distortions.
The digital RMB is a legal digital currency issued by the central bank. It is operated by designated operating agencies and is exchanged to the public. It is based on a comprehensive account system and is equivalent to banknotes and coins. It has legal compensation and value characteristics, and supports controllability. anonymous.
He said that the historical trend of currency development and changes in demand require an uproar on the supply side, using new technologies to digitize M0 (cash in circulation) to provide a universal base currency for the development of the digital economy. . In this process, the digital renminbi must adhere to central bank supervision.
** In the process of insisting on central bank management, it is necessary to prevent over emissions **
Mu Changchun mentioned that in the process of insisting on centralized management by the central bank, the following aspects should be achieved, including the overall management of the digital renminbi issuance quota to avoid excessive issuance; and the formulation of unified business standards, technical specifications, safety standards, and application standards.
It is also necessary to coordinate the management of the RMB digital information. Coordinate renminbi digital wallet management, unify renminbi digital recognition system, and effectively reduce the cost of fighting counterfeiting. In accordance with the principle of two-tier operation, the central bank and designated operational agencies will jointly develop the ecological portfolio platform through the use of co-construction and exchange methods; and will perform their own visual identification special function.
“We have found that counterfeit digital renminbi wallets have appeared on the market. Therefore, the People’s Bank of China is still facing the problem of anti-counterfeiting and anti-counterfeiting just like in the era of paper money. In the age of paper money, the cost of fighting counterfeiting and counterfeiting is high. In the age of digital renminbi, To reduce the cost of fighting counterfeiting, we need to coordinate the construction of an ecosystem of Renminbi digital wallet so ordinary people can identify it, “he said.
On the other hand, operating agencies must develop their own special functions to provide richer financial and payment products. At the same time, it is necessary to coordinate the construction of the digital renminbi issuance infrastructure, realize the interconnection and interoperability of cross-operation institutions, and ensure that there are no payment barriers.
Mu Changchun pointed out that the digital renminbi is a public product, in this process adhere to the positioning of M0 and public products. On the one hand, the meaning is that the digital renminbi does not count interest, because it is M0, and the paper money does not count interest, so the digital renminbi does not count interest.
On the other hand, the digital renminbi is not for profit and seeks to maximize efficiency and social welfare. Therefore, the central bank establishes a free digital renminbi value transfer system and financial infrastructure, and does not charge circulation fees to the issuing layer, and commercial banks do not.Customers charge service fees for the exchange and the redemption of digital RMB. This will help implement decision-making and the deployment of tax and fee reduction, reduce the burden on the real economy, optimize the business environment, and further stimulate market vitality.
At the same time, in order to mobilize the enthusiasm of all participants and operate in a sustainable manner, we must refer to the current cash arrangements, allocate a certain amount of expenses and establish a corresponding reasonable and effective incentive mechanism.
As for how to resolve costs between operating agencies and service agencies and merchants, this question should be determined through a market-based mechanism by both parties in a market-based manner.
** Digital RMB and banknotes will coexist for a long time **
Mu Changchun said that to build a digital renminbi ecosystem, it is necessary to explore models of cooperation between designated operating institutions and other commercial banks and other commercial institutions to ensure that the digital renminbi is widely available.
In the process of issuing digital renminbi, on the one hand, all commercial banks must also participate in circulation services; On the other hand, it is also necessary to ensure that all people, including poor areas and digitally disadvantaged groups, provide inclusive and accessible services. Conveniently digitize central bank currency to avoid digital divide and financial exclusion.
He also emphasized that the issuance of digital renminbi is not achieved by administrative application, but must be carried out in a market-oriented manner. “I personally believe that for the foreseeable future, the digital renminbi and paper notes will coexist for a long time.”
He mentioned that the central bank is now discussing the specific business model with all parties. In this process, it is necessary to ensure that the interests of small banks and small institutions are not harmed by this cooperation, which is why it is necessary to find a mutually beneficial business model. Or business model.
As for the relationship between WeChat and Alipay and the digital renminbi, what are the differences? Mu Changchun explained that WeChat and Alipay and the digital renminbi are not in the same dimension. WeChat and Alipay are financial infrastructures and wallets, while the digital renminbi is a payment tool and the content of the wallet.
In the electronic payment scenario, the WeChat and Alipay wallets contain deposit coins from commercial banks. After the digital renminbi is issued, everyone can use WeChat Alipay to pay, but the content of the wallet increases the central bank currency; at the same time, Tencent0700.HK, Ant’s respective commercial banks are also operating institutions, so there is no competition with digital RMB.
“It is necessary to emphasize here that in the whole process of green construction of the digital RMB, we must maintain fair competition, ensure that the market plays a decisive role in resource allocation, and fully mobilize the enthusiasm and creativity of all market parties. The issuance and circulation of the digital RMB implies. It has never been the responsibility of the People’s Bank of China to reach all aspects of society, nor is it something that one institution can achieve on its own, “said Mu Changchun.
Earlier this month, the State Council of China issued a comprehensive reform pilot implementation plan (2020-2025) for the construction of a pilot demonstration zone of socialism with Chinese characteristics in Shenzhen, and proposed to support Shenzhen to carry conduct closed internal pilot tests of digital renminbi and promote the development and implementation of digital renminbi and international cooperation; The financial industry is opening up to the outside world and the internationalization of the renminbi is well under way.
In mid-October, the People’s Bank of China and the Shenzhen municipal government successively issued “digital renminbi red envelopes” totaling 10 million yuan, the first time that the digital renminbi has been publicly tested. (Finish)
Posted by Ma Rong; written by Shen Yan; reviewed by Zhang Xiliang
