Recently, the Shenzhen Municipal People's Government and the People's Bank of China recently launched a digital RMB red envelope (DCEP) pilot activity, which aroused heated discussions in the society. This is the first time that DCEP has been issued to the general public. This pilot project reflects the importance the government attaches to the promotion of digital renminbi. So, what impact and changes will DCEP bring to public life? What is the international strategic significance of its issuance to China? In this issue of 58 College AMA, Li Sha, COO of Qianyuan Yunshuo, was invited to be a guest in the live broadcast room, and together with 58 TOP Tiantuan Shiyi, we will chat with you about DCEP~
The following is the record of this live broadcast~ 1 Shi Yi: The Shenzhen government's red envelope pilot program for the digital renminbi (DCEP) has been successfully concluded recently. This is the first time that digital renminbi is open to the general public. What impact and changes will digital renminbi bring to public life in the future? Li Sha: In my opinion, there are three main points: first, it is to save the cost of issuing currency and managing currency. Issuing money and managing money used to be too complicated and costly. What about the special paper used for banknote printing? What about the process of distribution to commercial banks? What should I do if the damage in transit? very complicated. Issuance has costs, recycling has costs, and destruction has costs, all of which are costs. Once the digital renminbi is adopted, most of the work can be completed in the network, which greatly saves the cost of issuing and managing currencies. Second, regulate currency circulation, anti-corruption and anti-money laundering, while protecting consumer privacy. Why do bribes have to be traded in cash? Because cash is difficult to trace. Transfers or card swipes will be billed, recorded, and tracked. Therefore, corruption, money laundering and other non-compliant and illegal activities will mostly be traded in cash. However, with the digital renminbi, transactions that occur online will all enter the central bank's database, and these illegal and criminal acts will have nowhere to hide. Even under the analysis of big data, crimes can be uncovered. Third, the digital renminbi is issued by the central bank. This also shows that the government sticks to the right to issue currency. Xu Yuan, an associate professor at the National School of Development at Peking University and a senior researcher at the Digital Finance Research Center, once said that in 2020, two things will be engraved into the historical coordinates, one is the new crown epidemic, and the other is digital currency. The future has come. bless. expect. 2 Shiyi: How will DCEP adapt to the future digital economy? What is the future direction of development? Lisa: The global epidemic has hindered the "outer circulation" of the world economy for a long time, and it is the general trend to tap the economic potential into the "inner circulation". However, in the era of epidemics, global monetary policy is in multiple troubles. How to strengthen support for the "internal circulation" has become a difficult problem for all countries. Therefore, the development of the central bank's digital currency is expected to provide the key to solving this problem from a new perspective. On the one hand, with DCEP as the fulcrum, the digital upgrade of monetary policy is expected to expand policy space, improve policy direction, and overcome the "liquidity trap", thereby enhancing the effectiveness of counter-cyclical regulation. On the other hand, DCEP is conducive to the formation of the RMB "electronic currency zone" and the shortcomings of the "internal circulation", thereby offsetting external policy interference and maintaining the independence and endogenous nature of policies. Based on the above effects, the application of DCEP in the future is expected to accelerate the "internal circulation" of my country's economy, and while consolidating the elasticity of economic fundamentals, it will further strengthen the "high α + low β" attributes of RMB assets. Therefore, in the era of epidemics, China's economy and finance are expected to maintain a unique and scarce allocation value for a long time. 3 Shiyi: Will DCEP pose a threat to the traditional financial industry? Will it replace a third-party payment institution? Li Sha: DCEP may have a direct impact on traditional finance in two aspects, The first is the interest rate and scale of bank deposits; The second is the intermediary business income brought by digital currency custody. In addition, I think DCEP may have three impacts on third-party payment institutions. 1) DCEP may pose a challenge to the third-party payment service business. 2) There are uncertainties in the impact of DCEP on the sales of asset management products such as cargo base by third-party payment institutions. 3) Under the DCEP system, it may be difficult for third-party payment institutions to directly obtain payment big data information, so credit investigation, risk control and other related businesses derived from payment big data in the original model may be affected. 4 Shi Yi: What is the international strategic significance of the DCEP pilot program for China? In what form will it promote economic development? Li Sha: At present, the digital economy is an increasingly important driving force for global economic growth. The development and application of legal digital currency is conducive to efficiently meeting the public's demand for legal currency under the digital economy, improving the convenience, security and anti-counterfeiting level of retail payments, and promoting the accelerated development of my country's digital economy. 5 Shi Yi: The Libra released by Facebook has also attracted a lot of attention. What is the difference between Libra and DCEP? What are the different application scenarios? Li Sha: DCEP is issued by the People's Bank of China. It is the first sovereign digital currency issued by the central bank. Libra is issued by Facebook, a non-governmental organization. It may be a stable currency anchored to the US dollar with the cooperation of the government. The digital currency launched by the central bank has some similarities with Libra, but there are also big differences. The similarities between the two are reflected in: the cost of issuance: both of them have greatly reduced the cost of paper currency issuance. High, the central bank's digital currency and Libra's paperless existence form can reduce the cost of each link and improve the efficiency of payment and settlement; In terms of privacy protection: the central bank's digital currency meets the needs of portability and anonymity while maintaining the attributes and main features of cash. Mu Changchun, the central bank's digital currency research institute, said that the central bank will combine "controllable anonymity" with anti-money laundering and anti-terrorism financing. , tax issues, online gambling and any electronic criminal activities; Libra also has controllable anonymity; In terms of reserve ratio: the central bank's digital currency is a substitute for M0. In order to prevent the central bank's digital currency from being overissued, commercial banks need to pay a 100% deposit to the central bank, and the central bank will exchange the digital currency to commercial banks according to 100% reserve. Commercial banks or commercial institutions will connect with the public again; the latest revised Libra white paper 2.0 shows that it will increase the provision of stable coins anchored to a single legal currency, and clearly cooperate with central banks to issue Libra coins based on a single legal currency. Each single currency stable currency All will be backed by a 1:1 reserve fund. Both central bank digital currency and Libra implement 100% reserve ratio support; Issuance structure: The central bank's digital currency adopts a "central bank-commercial bank" two-tier operation model. The central bank exchanges the digital currency to commercial banks, and the commercial banks connect with the public. Burden; Libra's issuance structure is similar, from the Libra Association to distribution agencies to the public, all adopt a model in which the core system does not directly trade with end users. Although there are certain similarities between the two, the central bank's digital currency and Libra have completely different development paths, and there are differences in many aspects such as positioning, credit risk, issuance structure, technical path, and governance model. 6 Shiyi: What obstacles will the large-scale application of DCEP encounter at present? What is the solution? Lisa: The Nobel laureate in economics Mundell believes that three things cannot happen simultaneously when a country formulates policies: First, the country wants to have a completely autonomous monetary policy. Second, the country must maintain the stability of its exchange rate. Third, the country allows free movement of capital. In the past, China chose the first two of this impossible triangle. Stabilizing the RMB exchange rate is a strategic goal of the Chinese government in the future. In the future, if the RMB internationalization is to be realized through DCEP, this impossible triangle will be better balanced. On the basis of stabilizing the RMB exchange rate, foreign exchange controls will be appropriately relaxed so that capital can flow more freely. Zhang Wuchang, an international economist, believes that the removal of foreign exchange controls is necessary for the internationalization of the RMB. He pointed out that in the early stage of lifting foreign exchange control, the central bank's foreign exchange reserves will definitely be lost. However, if the world accepts the renminbi, the central bank's foreign exchange reserves will rebound. Give the renminbi an anchor and then push the renminbi out of the world, so that the exchange rate of the renminbi should float freely, and China's interest rates should also float freely. DCEP is a major weapon for a big country, and its launch is an important step in the internationalization of the renminbi. However, in this process of internationalization, we must also balance the impossible triangle of monetary policy, and allow capital to flow more freely on the basis of a stable exchange rate.
