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Yao Qian, director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, said that with the rise of the modern information technology revolution, the impact of technology on currency is reaching an unprecedented level, and Bitcoin has triggered large-scale digital currency experiments around the world. The digital age has already arrived, and the digital currency era is bound to come.
Recently, Yao Qian, director of the Science and Technology Supervision Bureau of the China Securities Regulatory Commission, wrote an article in "Comparison" magazine, elaborating on the development of the central bank's digital currency and the theoretical logic behind it. Technology’s impact on currency substitution is reaching an unprecedented level
In the article, Yao Qian reviewed the changes in the form of currency. Driven by technology, the form of currency has evolved from commodity currency, metal currency, paper currency to electronic currency, and has now extended to broader monetary levels such as credit currency and highly liquid financial assets.
With the rapid development of digital technologies such as blockchain, big data, cloud computing and artificial intelligence, the impact of technology on the evolution of currency has become more profound.
This impact is attracting widespread attention from central banks, industry and academia around the world.
Yao Qian said in his article that, in addition to the transaction and transfer functions, currencies often move because of value. Wherever the value is more stable and the return is higher, the currency will flow there. And this flow leads to currency substitution. This currency substitution can cause various tragedies and comedies in the world, or even "wars" for currency dominance, such as exchange rate wars that harm neighbors, various trade/currency alliances, and reforms and games of the international monetary system.
Previous currency substitutions were caused by changes in the value connotation of currency, which can be called "classical currency wars", while current currency substitutions caused by technology can be called "new currency wars."
Moreover, with the rise of the modern information technology revolution, the impact of technology on currency is reaching an unprecedented level and will continue to develop, expand and deepen. It may even trigger changes in the entire monetary and financial system, thus attracting widespread attention from all walks of life around the world.
The “new currency war” triggered by Bitcoin has just begun
Yao Qian believes that this "new currency war" can be traced back to the global financial crisis in 2008. The outbreak of the financial crisis has led to widespread doubts about the reputation of central banks and the credit intermediary function of the entire financial system. The Austrian school of thought has resurfaced, and the number of supporters of the "denationalization" of currency has continued to increase. Against this background, decentralized programmable currencies represented by Bitcoin, which are not supported by the credit of sovereign states, have "come into being".
The Libra white paper states: "Libra's mission is to build a simple, borderless currency and financial infrastructure that serves billions of people." Now it seems that its grand mission may not necessarily succeed, but we should actively respond to such a vision. At least in terms of technology or model, it provides us with new references and options, which is beneficial to social progress.
Bitcoin has triggered a large-scale digital currency experiment around the world.
Yao Qian believes that the rise of "decentralized" digital currency is more like an alarm clock, reminding central banks to pay attention to the stability of the value of legal currency, reminding central banks not to ignore the inevitable technological wave of digital cryptocurrency, and reminding central banks to pay attention to the integration and innovation of central bank currency and digital technology.
As early as 2014, the People's Bank of China officially launched research on legal digital currency to demonstrate its feasibility; in 2015, it continued to strengthen its forces and carry out research on nine major topics; in 2016, the People's Bank of China Digital Currency Research Institute was established.
After 2016, central banks of various countries also began to take action and conduct central bank cryptocurrency experiments based on blockchain technology, such as Canada's Jasper Project, Singapore's Ubin Project, the European Central Bank and the Bank of Japan's Stella Project, Thailand's Inthanon Project, and Hong Kong's LionRock Project.
This is a brand new track, and the participants include the private sector, the public sector, sovereign states, international organizations, financial institutions, technology companies, industry alliances, geeks, economists... Overall, this "new currency war" has just begun.
Central bank digital currency experiments based on blockchain technology are progressing rapidly
Unlike private digital currencies such as Bitcoin, legal digital currencies or central bank digital currencies are "genuine" and do not have price instability or compliance issues.
Some economies have chosen the cryptocurrency technology route represented by blockchain technology, such as Canada's Jasper Project, Singapore's Ubin Project, the European Central Bank and the Bank of Japan's Stella Project, Hong Kong's LionRock Project, and Thailand's Inthanon Project. However, some economies are wavering and there is still controversy over whether to adopt blockchain technology.
Blockchain technology has the advantages of being difficult to tamper with, traceable, traceable, secure and reliable, heterogeneous and multi-active, and intelligently executed. It is the prototype of a new generation of information infrastructure and the foundation of a new value exchange technology, a distributed collaborative production mechanism, and a new algorithmic economic model. At present, central bank digital currency experiments based on blockchain technology in various countries are progressing rapidly, and the content has involved a wide range of issues such as privacy protection, data security, transaction performance, identity authentication, securities-to-payment, and payments-to-payment.
Yao Qian believes that as a brand-new technology, blockchain certainly has various shortcomings and deficiencies, but this just shows that the technology has huge room for improvement and development.
Yao Qian finally said that although countries have been "holding back" and there has not yet been a true central bank digital currency, both the digital dollar plan and the white paper on the digital dollar plan indicate that the United States has officially joined the "hot central bank digital currency battle."
The digital age has already arrived, and the digital currency age will inevitably come.
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