Is There a National Team? Global Central Bank’s Digital Currencies Open the New Era of Digital Economy
On August 10th, 2019 at the Third China Finance 40 Yichun Forum, Mu Changchun(Former Deputy Director, the People’s Bank of China’s Payment and Settlement Division), said that “The CBDC (Chinese Central Bank Digital Currency) is about to be launched”. One of the eight key tasks in the second half announced by the People’s Bank of China is to accelerate the research and development of fiat digital currency (DC/EP).
Some people may wonder why they want to study fiat digital currency. That’s because, on the one hand, the digital economy is seen as a new lever to stimulate the global economy, while the fiat digital currency is the cornerstone of the digital economy development. On the other hand, the fiat digital currency can also improve financial inclusion to a certain extent and traceability(one of its features) can prevent money laundering and crime.
The research, test, and development of fiat digital currency by many central banks have been ongoing:
The People’s Bank of China established a special research group for fiat digital currency as early as 2014;
There was a co-exploration between Jasper(a Canadian project) and Ubin(the Singapore Monetary Authority’s project);
Cecilia Skingsley(Deputy Governor, the Swedish Central Bank) also revealed that the possibility is more than 50% for the Swedish Central Bank to issue its own digital currency “e-krona” in the next 10 years;
There are also Britain’s RSCoin project, Japan’s J-Coin project, South Korea’s S-Coin project, Turkey’s Turkcoin project and so on, all of which are positive attempts by central banks to develop digital currencies.
In December 2018, G20 has decided to regulate the cryptocurrency industry. The joint statement states that it will supervise the cryptocurrency assets applicable to anti-money laundering and counter-terrorism financing in accordance with the FATF (Financial Action Task Force) standards. The statement represents the recognition of the digital currency and the digital economy by the G20 countries, and also indicates that compliance development is just around the corner.
Forbes reported that the CBDC will be issued in the fastest 80 days, and the People’s Bank of China is giving its first round of CBDC to seven institutions including Alibaba and Tencent. The news has yet to be confirmed, but it is not difficult to find the central bank’s positive attitude towards the fiat digital currency. The People’s Bank of China’s official news mentioned the digital currency four times just in August. On August 21, its WeChat public account even issued two more digital currency-related articles.
Yao Qian(Former Director, the China Digital Currency Research Institute) said that the CBDC’s framework is mainly designed to be convenient, efficient, safe, controllable, and general-friendly. Fan Yifei(Deputy Governor, the People’s Bank of China) once said that the CBDC should adopt a two-tier operating system, that is, the People’s Bank of China first converts digital currency to banks or other operating agencies and then these organizations give them to the public.
Through such a two-tier operating system, it is possible to avoid excessive concentration of risks to a single institution (central bank), also avoid crowding out bank deposits and affecting the ability of bank loans to be placed.
DALICHAIN’s pre-research of the national digital currency strategies & policies coincided with the official double-layer technical solution of “combining the original bank’s account system with the digital currency wallet-based account system”.
In general, the fiat digital currency of central banks is conducive to currency issuance innovation, reducing the cost of digital economy transactions, improving efficiency, and meeting the general trend of information and intelligence. DALICHAIN has been concerned about the development of fiat digital currency and is constantly exploring related technologies to continuously contribute to the development of the digital economy.
