Editor's Note: This article comes fromMars Finance (ID: hxcj24h)Mars Finance (ID: hxcj24h)

This article is intended to convey more market information and does not constitute any investment advice.

, author Wang Xin, reproduced by Odaily with authorization.

This article is intended to convey more market information and does not constitute any investment advice.

Facebook Libra and cryptocurrencies are gaining more and more attention from high-level governments.

At the launching ceremony of the Digital Finance Open Research Program and the first academic seminar held on July 8, Wang Xin, director of the Research Bureau of the People's Bank of China, revealed that the State Council has officially approved the research and development of the central bank's digital currency, and the central bank is currently organizing market institutions to engage in corresponding work .

In his speech, Wang Xin introduced the latest research on Facebook Libra, central bank digital currency and digital finance. Wang Xin said that the development of science and technology has made transactions and industry restrictions in the past do not exist in the digital age. Stablecoins such as Facebook Libra, as payment tools, can play more currency functions if they are widely used, thereby impacting legal tender and reducing the impact of monetary policy. effectiveness.

9. Reflect on the supervision of cryptocurrencies: In the past few years, we (the central bank) adopted a very strict attitude towards virtual currencies and virtual assets. After Libra, what kind of attitude and strategy should be adopted?

10. In the field of digital finance, in order to strengthen international coordination and cooperation, it is particularly necessary to voice China's voice as soon as possible. The voice of China does not necessarily fully represent the voice of the government. There should also be voices of many important markets and people.

The following is the full text of the speech by Wang Xin, President of the Central Bank Research Institute:

Dear Director Li, experts and colleagues, good morning!

I am very glad to have this opportunity to participate in the conference on the establishment of the open platform. I think this is really a powerful academic research platform. Mr. Huang Zhuo mentioned Libra just now. In fact, when Facebook released Libra, our digital financial research platform was also established. I think this may not be a coincidence, at least it shows that both at home and abroad attach great importance to digital finance, financial technology, etc., and not only from academic research, but also from practical applications, etc., very urgent topics have been raised. Our platform is supported by a number of academic institutions, and has received the support of Ant Financial Services, the most advanced leader in digital financial innovation in our country. At the same time, a very important feature of ours is that our digital financial Focus on the real economy and inclusive finance. I think it is very important to continue to compete with peers internationally, maintain a leading position, and ultimately serve the real economy.

The People's Bank of China has also been paying close attention to and participating in relevant research work. In 2015, our research institute established the Internet Finance Research Center. I am still in charge of the work of the Monetary Fund. Originally, the Monetary Fund was in charge of the traditional cash business. Most of the people here are young people, and they rarely use cash. With the rise of Ant Financial, Tencent and other platforms, I thought my work would become easier and I would have more time to read books. But unexpectedly, we will be more involved in new work instead. Under the strong advocacy of Governor Zhou in 2014, the central bank started the research and development of digital currency and central bank digital currency. Now, with the formal approval of the State Council, the central bank is organizing market institutions to conduct research and development of central bank digital currency. It should be said that this work started relatively early, but as Mr. Huang said just now, whether we can continue to maintain our leading position requires us to do a lot of work.

In short, it was wrong. Because the central bank's digital currency is defined as M0 in China, it is a substitute for cash to a certain extent, so this work has also fallen to our Monetary Fund. Cash is the most traditional form of currency, so it has suddenly entered the form of the most advanced digital currency. We feel the pressure is very high, and we are eager to cooperate with the industry, academia, financial circles, and Internet companies, etc., to participate in relevant research.

Today I want to give you a brief report mainly from the perspective of the central bank, introducing some international organizations and new things in the field of digital finance that the central bank is more concerned about. Of course (in this area), it was more of an impact on payments before. As we all know, Tencent, Ant Financial, etc., have made very fast progress in payment. Later, virtual currencies, or digital assets, appeared. Everyone is concerned about whether it will form a substitute for currency. However, due to its violent price fluctuations and inconvenience in transactions, international organizations such as the FSB (Financial Stability Board) believe that it has not really played the role of a currency for a long time, so it is important for financial stability and monetary policy. In terms of impact, it will not replace real currency to a great extent. Therefore, the impact on monetary policy is not very large, and the impact on financial stability is not very large. Of course, they also raise other important questions.

With the birth of Libra, everyone attaches great importance to it this time. Because it claims to be a basket of currencies, it solves the problem of trust and widespread use to a certain extent-because it is based on a large platform. If it is said that Libra may realize significant development prospects in the payment field, especially in the field of cross-border payment in the future, then the scope of use will be further expanded. Will Libra play more of a currency function? This problem is very big. It may have a significant impact on the monetary policies of various countries, financial stability, and even the international monetary system. Everyone guesses how much the dollar will play behind it. Is it a package of anchored currencies, and the actual trend is anchored to the US dollar? If the final digital and virtual currency fields are also closely related to the U.S. dollar, then the international monetary system may form a situation where the past fiat currency and the U.S. dollar-centered digital currency coexist. But in the end everyone probably thinks it's all just one boss, the dollar, the United States.

If so, it will not only bring about economic and financial issues, but even a series of complex issues such as international politics and political economy. So the discussion in this area is much broader than the dimension that everyone discussed two months ago. The launch of our research platform comes at an opportune time. In the next stage, we are also very willing to contribute, from the perspectives of policy research, practice, monetary policy, financial stability, etc., and cooperate with you to conduct research on more interesting issues.

I mainly talk about two aspects:

The first part is to introduce some concerns of major international financial organizations and central banks on digital finance and financial technology from the perspective of our central bank;

The second part, from my personal point of view, puts forward issues that people may be more concerned about in the next stage, at least from a policy perspective, for your reference.

From the perspective of the government and the central bank, we are more concerned about three aspects: the first is the impact on financial services, the second is the impact on monetary policy, and the third is the impact on financial stability.

The first aspect is the impact on financial services. Many studies believe that regardless of the development of financial technology or the rise of digital finance, financial technology can improve the efficiency of financial services, promote service innovation, and bring more efficient and accurate services. The application of artificial intelligence technology can greatly optimize the business model of financial institutions, and it will also have an important impact on the behavior of banks. More creative enterprises can use the Internet and new business formats to obtain credit faster, thereby promoting economic growth. For technology giants, everyone's interest is getting stronger and stronger. Technology giants can provide high-efficiency, more convenient, and lower-cost financial services, which all stem from financial innovation itself and from the intensified competition brought about by technology giants. In the product field, these stickiness to customers, financial institutions and customers, as well as the impact on competition have brought direct changes.

Obviously, the development of fintech and fintech giants will force traditional financial institutions to transform. As we all know, big banks are now investing a lot in financial technology, and they are making rapid progress in these areas. At the same time, small and medium-sized banks also attach great importance to this area. They are in the front line of inclusive finance and supporting small and micro enterprises, but now they do not have enough strength to make major investments in financial technology. In the follow-up, I will also mention how to help small and medium-sized banks catch the express train of financial technology development and transform their business and technology. These are important issues in the next stage.

Financial big data has brought about important changes in quantitative investment and robo-advisor. The development of technology and finance makes financial institutions not only insist on KYC and understand your customers; but also because data is important, they must understand your data more. Only in this way can we price risks more accurately and realize the effective allocation of financial resources.

In these respects, promoting the development of digital financial inclusion is a very important application area. In this regard, the People's Bank of China has always attached great importance to it, and has always played a leading role in international financial exchanges and international cooperation. At the 2016 Hangzhou Summit, the People's Bank of China represented China as the chairman of the G20 Global Inclusive Finance Partnership, and at that time promoted the introduction of the G20 Inclusive Finance Advanced Principles. After that, the People's Bank of China also served as the co-chairman of GPFI (Global Partnership for Inclusive Finance) and has been an advocate of digital inclusive finance. Therefore, the People's Bank of China has been uniting relevant countries to promote related work. It can be said that digital finance has great potential. Because of the characteristics of inclusive finance itself, traditional financial institutions have shortcomings and disadvantages when they get involved in inclusive finance. With the help of digital finance and financial technology, people can overcome the problems of high risk, high cost and low return of inclusive finance to a certain extent. Of course, with the low-cost collection of a large amount of data and the effective application of technological means, traditional concepts may also be broken. It does not necessarily mean high costs and low returns. For example, the practice of Ant Financial, which everyone is familiar with, also uses the power of technology to provide inclusive financial services at low cost.

We also have some discussions on the impact on monetary policy. This is an area of ​​greatest concern for central banks, especially when it comes to digital currencies. The impact on monetary policy is now more discussed, and there are several angles:

1. The competition in the financial industry has been intensified, and big data has enhanced the ability of financial institutions and real economic sectors to obtain information. Markets may be more responsive to interest rates, making monetary policy transmission more efficient. But it can also lead to an overreaction.

2. The development of financial technology has promoted the expansion of non-bank financial institutions. in tradition. Monetary policy is basically transmitted through commercial banks. If more and more financial business and financial services are carried out through non-bank financial institutions, it will obviously have a direct and important impact on the transmission of monetary policy.

3. Impact on asset prices. As you all know, in addition to paying close attention to the CPI price index, the central bank has always debated whether to pay attention to asset prices. But in any case, the central bank should pay attention to changes in asset prices and economic cycles, which is the bounden duty of the central bank.

In the case of financial technology development, changes in asset prices will also have a direct impact. In some transactions on e-commerce platforms (of course, many of them are the transaction prices of traditional commodities), some applications of financial technology in the asset market, adjustments will be more frequent and drastic.

Virtual currency. If virtual currency can increasingly replace traditional currency, and the central bank mainly targets traditional currency, then the effectiveness of its monetary policy will definitely be reduced. Especially Libra, everyone is very concerned about it. With the help of the participating institutions united by the large platform behind it and a large number of usage scenarios, Libra may be widely used. Some people even think that at a certain stage, it will rely on a package of legal currency as credit support. However, if it can rely on itself to gain market trust, it will be increasingly used as a store of value, or even used as credit, then the virtual currency may have the function of money creation and have a greater impact on monetary policy. This is a very controversial issue.

Now comes the central bank digital currency. Everyone thinks that the virtual world is based on encryption algorithms, and the so-called virtual currency and virtual assets are not reliable, so we directly issue central bank digital currency through the central bank, just as the central bank is trying to do now. In fact. The Bank of England, the Bank of Canada, and the Riksbank are also conducting relevant research and attempts, but the details are not very clear. If the central bank directly issues the central bank's digital currency, it will be the direct legal currency, that is, the renminbi. It also contributes to the development of the central bank's payment function. In this case, can the central bank deal with the influence and impact of various virtual currencies? In terms of payment and in the retail field, will it lead to some new changes in the payment industry? It also has the potential to reduce the cryptocurrency onslaught on fiat currencies. The effectiveness of monetary policy will also be maintained.

Of course, this largely depends on whether the central bank's digital currency calculates interest on it. If interest is calculated, the central bank can adjust the interest rate to better and more easily realize the intention of the central bank's monetary policy. At least one point, in the case of the zero lower bound of interest rates in many European and American countries and regions, if the interest rates are made very low, or even negative, digital currencies may be transferred to cash. In the case of central bank digital currencies, cash is already becoming scarce. This kind of transfer is difficult to become a reality. Even if interest is paid on the central bank's digital currency, it will obviously be of great benefit to the realization of the central bank's policy intentions. Some international scholars are vigorously advocating and putting forward policy suggestions in this regard.

Regarding the impact on financial stability, the central bank focuses on these aspects. The increased risk of financial disintermediation brings about the risk of regulatory arbitrage, which has been widely discussed. Many institutions engaged in digital finance are not completely under the current financial supervision. Different regulatory authorities and different countries have different related regulations. These will cause regulatory arbitrage or regulatory gaps, which may lead to the generation and spread of risks. Now the issue of technology giants is being discussed internationally, and it has actually become an example that cannot fail. Therefore, it will have a direct impact on financial management and the prevention of systemic financial risks.

Financial technology is more concealed, destructive, and systematic. While seeing its benefits, everyone should pay enough attention to many aspects of its rapid development. Including the mutual reinforcement of data risk and information security risk.

The second part briefly mentions several issues that we need to consider in depth in the near future from a policy perspective. These have just been mentioned. In order to promote the research and development of the central bank's digital currency, we have specially established the central bank's digital currency research institute, and closely cooperate with local governments in Shenzhen and other cities to carry out system development and so on.

First of all, about encrypted digital currency, especially the stable currency represented by Libra. Because the price of Bitcoin fluctuated too much in the past, now everyone is focusing on stablecoins, especially Libra. Will there be a coexistence of legal digital currency and a few digital stablecoins in the future? From the perspective of the use of currency, it should eventually be eliminated in a relatively short period of time through market elimination or intentional government influence, and only a very small number of payment tools or currencies can survive. In this way, market transaction costs can be reduced.

Everyone knows that behind the currency are interests, power, politics, international politics, and diplomacy. Therefore, if a payment tool still functions as a currency to a considerable extent, it will inevitably impact the legal currency, which will have a direct impact on international monetary regulation, financial regulation, and even all aspects. With the development of science and technology, the limitations of territory and industry in the past may not exist in the digital age. From the perspective of the externality of the network, the fewer tools or currencies for payment, the better, so that it is convenient, which is the internal demand of the market itself.

But we are still in the general situation of a sovereign country, and for a period of time from now to the future, everyone will see some kind of stagnation in globalization, and even some kind of reversal in some aspects, people adopt internal and closed policies and so on. Could it be that in currency, the most important financial field involving power and national sovereignty, it can welcome the so-called international currency or super-sovereign currency with open arms? This requires a big question mark. Maybe some kind of conflict between technology, market and national sovereignty will exist for a long time in the future.

Next, how do we deal with Libra? I believe that everyone will have different ideas. For example, speeding up the launch of the central bank's digital currency, countries supporting the issuance of their own Libra projects, these are issues worth considering. Even the IMF (International Monetary Fund) jumped out and issued a super-sovereign digital currency. These are all worthy of attention.

The second point is to explore how digital finance can better support the development of the real economy. This is also an important research field of our platform, and we will continue to deepen inclusive finance. In terms of digital inclusive finance, we are thinking about how to strengthen our advantages and deal with various external challenges when we have a good foundation.

Thirdly, from the point of view of the regulatory authorities, how to improve the financial technology regulatory framework and develop regulatory technology, there are also a lot of practical issues that need to be studied. For big technology giants, we require them to be "too big to fail", otherwise there will be systemic financial risks. For example, a very practical question, after the emergence of Libra, should Libra be allowed to be used in China? Now there are more and more voices in the market. In the past few years, we have adopted a very strict attitude towards virtual currency and virtual assets. After Libra, what kind of attitude and strategy should be adopted? Of course, what I'm talking about now is just an assumption. Because even Libra itself is just a plan, but we can conduct academic discussions and deduction. If we also support our own institutions, have a very good foundation and conditions, and issue a Chinese version of digital currency similar to Libra, what should its application scope be like? Mainly used to compete with Libra and used in the international field? Or can it be widely used in the country? What impact will it have on the current RMB? Of course, one thing is certain, that is, traditional cash is definitely getting smaller and smaller. My personal energy may also shift from physical cash to digital cash. This is a huge challenge for me, and it is also an interesting and challenging topic for everyone here.