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This well-known saying refers to a core issue of currency - the right to issue, but after the birth of Bitcoin, the currency war for the right to issue currency seems to have just begun. Now, the central bank has revealed a new weapon—the central bank digital currency (CBDC). Can it become a decisive factor in this war?

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How long has it been since you used cash?

When society begins to move away from cash, the central bank is most likely to be threatened. In response to the pressure brought by digital currency, many governments have begun to consider the creation of central bank digital currency (CBDC). As a result, the debate over whether governments should experiment with central bank digital currencies, and the pros and cons of central bank digital currencies, has been put on the agenda of policymakers and investors.Mainstream media often mistakenly refer to government-backed digital currencies as “cryptocurrencies,” without defining the entirely new concept of central bank digital currencies. In fact, there is a big difference between central bank digital currencies and so-called "cryptocurrencies" -

Cryptocurrency is a blockchain asset, and no one person is required to take responsibility; while the central bank's digital currency is based on the debt and reserve banking financial system. Simply put, the central bank's digital currency is a liability of the country's central bank.

Obviously, the reason why Satoshi Nakamoto wants to create a cryptocurrency based on the P2P electronic cash transaction model is to break through the barriers of traditional monetary policy and make the central bank look like a redundant existence. Time flies, ten years have passed since Satoshi Nakamoto published the Bitcoin white paper. The blockchain distributed ledger technology that supports Bitcoin can also be used by central banks and expanded to issue central bank digital currencies.

(Two major classifications of new forms of money: central bank digital currencies and cryptocurrencies)

There is no doubt that the prelude to the real currency war has begun, and the central bank's digital currency and cryptocurrencies led by Bitcoin have long been ready.

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"If you can't beat them, join them"

Cryptocurrencies are rising around the world, and their popularity is getting higher and higher. If Bitcoin is "the people's money", then legal tender is "the country's money"-many countries have therefore begun to find ways to deal with the pressure from cryptocurrencies. Challenged.

Singapore has the UBIN project, the Bank of Canada has launched the Jasper project, the United States is promoting the idea of ​​a "FedCoin", and the Swedish central bank is also considering an "e-krona".

1. Sweden - In the past decade, the demand for cash has dropped significantly. Many retail stores no longer accept cash, and some branches of local Swedish banks no longer even pay or accept cash. The Swedish central bank has begun to study the feasibility of the e-krona project, and has not yet made a technical decision;

2. Marshall Islands - Marshall Islands will issue its own cryptocurrency, which will be circulated together with the U.S. dollar as legal tender;

3. Switzerland - the Swiss National Bank does not see any need to launch an e-Swiss Franc at this time;

4. Indonesia-Indonesia does not prohibit cryptocurrency transactions, but does not consider digital currencies to be legal tender;

5. Venezuela - Venezuela has launched a cryptocurrency backed by crude oil, aiming to help the country's economy get rid of US sanctions and growing inflation problems;

7. Russia - Oleg Fomichev, Deputy Minister of Economic Development of Russia, revealed that "CryptoRuble" will become a digital currency in Russia's digital economy and will be promoted in the international market.

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Will all commercial banks die when the central bank digital currency is issued?

If the central bank decides to issue its own digital currency, the only reason is to expand the existing fiat currency in circulation. Most people, however, consider central bank digital currencies to be a whole new form of money—they see central bank debt as a unit of account, as both a medium of exchange and a store of value.

On the other hand, even the central bank itself is confused about whether it is possible to issue digital currency.

In March of this year, the Bank for International Settlements released a central bank digital currency analysis report, which specifically emphasized that the central bank must carefully weigh the impact of financial stability and digital currency issuance policies. Central bank digital currency may be a new form of digital central bank currency, which is different from the reserves or settlement balances held by commercial banks at the central bank. If this is the case, it will undoubtedly lead to a series of old problems such as the role of central bank currency and the financial intermediary played by the central bank.

(future currency type?)

At this stage, the focus of debate is whether the central bank's digital currency should be widely issued like legal tender, or should it be strictly restricted?

Open to all, effectively means that everyone will have an account with the central bank, which is very similar to the idea of ​​​​bitcoin. However, the central bank's digital currency relies on "peer-to-peer" transactions, which will greatly weaken the role of traditional commercial banks-obviously, if everyone is "P2P transactions" or "P2P transfers", who would need commercial banks as intermediaries? ?

Therefore, issuing the central bank's digital currency is not a decision that can be made with a single brain. It requires careful analysis of the bank's business model and financial stability, as well as a series of possible consequences.

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"Everyone can issue coins, the difficulty is getting people to accept your currency"

Money has the ultimate network effect, and both cryptocurrencies and central bank digital currencies can multiply this effect and drastically reduce the acceptance of fiat currencies in the global financial system.

One of the advantages of cryptocurrencies is that no one can own it, because cryptocurrencies are democratized through distributed ledger arrangements, all you have is block ownership. You can only buy part of the blockchain, in other words, you cannot quantitatively easing cryptocurrency, because its system has already established a set of principles internally.

The blockchain economy is indeed an option. The entire market is very principled, and it is also an asset-based economy. Given the rising level of electronic payments and the emergence of new technologies, now is the time to think carefully about the future of money.

The emergence of Bitcoin has drawn people's attention to the problems existing in the current monetary system, such as the inefficiency of cross-border payments, the central bank's policy mistakes that triggered the Wall Street financial crisis, and inflation in Venezuela. These problems will bring frequent financial risks.

In addition, it seems that the current discussion on the central bank's digital currency is limited to the level of financial regulators, and consumers and enterprises have not participated. Do they feel that it is necessary or necessary to accept the central bank's digital currency? The answer to this question is that the beholder sees benevolence and the wise sees wisdom.

Finally, let us end with a sentence that the American economist Hyman Minsky said——