Securities Times: Multiple obstacles need to be overcome before the central bank’s digital currency can be implemented

It needs to be made clear that technological innovation has the potential to promote institutional innovation, but monetary institutional innovation has never been technology-driven but rather economic-driven.

Securities Times reporter: Huang Xiaopeng

On October 28, Huang Qifan, vice chairman of the China Center for International Economic Exchanges, said at the first Bund Financial Summit that the People's Bank of China may take the lead in launching digital currency. This statement aroused strong interest from all parties in the market.

As early as the beginning of Bitcoin, the People's Bank of China expressed the idea of ​​using blockchain to create an official currency. After Facebook proposed to create Libra, the outside world expected further upgrades. What should the central bank's digital currency look like? Comparing it with Bitcoin and Libra may help us imagine it.

Bitcoin was born out of the demand for currency stability. But it turns out that it is extremely unstable and can never become a currency. The Libra plan is one step closer to reality, and 100% reserve support makes it distinct from the "currency circle" that is engaged in fraud. Although Libra does not take currency stability as its demand, its diversified reserves can objectively achieve this effect, and its demand to reduce the cost of financial services such as currency exchange can be regarded as hitting the pain point of the market. However, despite the perfect concept, Libra is still difficult to move from utopia to reality. The fundamental obstacle is that it will have unpredictable effects on existing national concepts and financial systems. For example, foreign exchange control or foreign exchange statistics issues, the relationship between Libra and government currency and financial system, etc. Libra's concept goes beyond the current status of human social development, and its social cost is an issue that cannot be avoided.

So, what is the appeal of the central bank's digital currency? Reduce transaction costs? Let's assume that all "currencies" can be realized with the help of technology, although in fact it is not necessarily the case. Break through territorial boundaries and let the RMB flow freely in the world? So does it adopt the Bitcoin model or the Libra model? What is its relationship with traditional RMB? If it is to replace M0 as reported, what are its advantages compared with ordinary electronic currencies? Is verification and settlement centralized or decentralized? If centralized, what is its innovative value?

It should be made clear that technological innovation has the possibility of promoting institutional innovation, but monetary system innovation has never been technology-driven, but economic-driven. In the thousands of years of human civilization, technological progress has continued, but the monetary revolution has only occurred once, when credit currency replaced physical currency. The constant changes in carriers and forms have not changed its essence. If the central bank's digital currency is to be realized, the first thing is to clarify the demands. All the above questions must be clearly answered, and contradictory goals in the structural design must be eliminated. If the central bank's digital currency concept can be announced as soon as possible, it will not only help to solicit opinions for improvement, but also help to promote and apply it when it is actually released.