“More and more countries are making efforts to research and develop legal digital currency technology, but different countries have different internal needs, so they choose different technology paths and solutions. China has complete infrastructure and is fully prepared from a technical point of view. Through bidding in the past two years, the Swedish central bank will select the best solution from more than 30 technology companies around the world. This year, the world is expected to Usher in the first year of legal digital currency, “said David Wen, chairman of the legal digital currency focus group of the International Telecommunication Union (ITU), in an exclusive interview with the reporter of Shanghai Securities Daily recently.

In 2017, Wenwu and the Institute of statistics of the people’s Bank of China jointly established and chaired the “legal digital currency focus group” in the International Telecommunication Union under the United Nations. Together with the central banks of Canada, Sweden, Japan, Brazil, Egypt, the Philippines, Indonesia and other countries in the world, as well as the International Monetary Fund, the bank for International Settlements and the BRICs bank, we will study the development and promotion of global legal digital currency.

Different countries have different needs to launch digital currencies

“Cash has security functions such as anonymity and anti-counterfeiting. Another feature is that it does not need settlement as a means of payment. Bank transfer and third-party payment all need to be settled across account books during transfer, resulting in efficiency loss. Once legal digital currency is adopted, it can greatly reduce the friction and cost of payment.” Wen Wu believes.

For users, the cash function is convenient for holders to use without cost, friction and risk. At the same time, it has strong privacy protection function and inclusive characteristics. However, cash cannot be used online. An important purpose of legal digital currency is to retain these functions of cash online.

According to the research of ITU focus group on legal digital currency in the past two years, the starting point of developing legal digital currency in many developing countries is to solve the problem that many people do not have bank accounts and high cash flow costs. These countries hope to use more convenient digital payment tools in the digital world to significantly reduce the cost of cash. In developed countries, because credit cards are widely used, convenient, efficient and strict supervision, currency digitization mainly considers the security and efficiency of clearing and settlement, and reduces the risk brought by asset digitization by improving the efficiency of asset flow.

“This was highlighted in the Bank of England’s legal digital currency white paper. The ITU legal digital currency focus group also positioned legal digital currency as retail and wholesale, but the two have a trend of integration. Many developed countries also found that the cost of credit cards is high. With the popularity of smart phones, they also began to consider how to reduce spending through legal digital currency The cost paid, “Wen Wu said.

When will the first year of digital currency be

Who will be the first to introduce legal digital currency

As a digital currency expert, Wenwu is very familiar with the research and development progress of digital currencies around the world and has had in-depth communication with dozens of central banks such as the people’s Bank of China, the Central Bank of Sweden and the Central Bank of Canada.

Wen Wu believes that 2020 may be the first year of digital currency, but it is difficult to determine which country will take the lead in introducing legal digital currency. Legal digital currency is a financial innovation that “affects the whole body by pulling one hair”. Many countries have done in-depth research, but it may be launched in stages due to relevant legal procedures.

China, Canada, South Africa and Sweden are probably the first countries to launch legal digital currencies. Through the regulatory upgrading of the three party payment platforms such as Alipay and WeChat in recent years, China’s statutory digital currency can be promoted quickly from a technical perspective. China’s financial technological innovation environment is superior, and the statutory digital money channel has been repaired. The retail legal digital currency is ready to come out, “Wen Wu said.

As for whether the digital currency is in the form of account, he believes that the Swedish central bank issued a white paper on the demand for digital currency of the central bank in 2017 to explore whether to use the account model. At present, it has selected the technical route of non account model through bidding.

International standards on the agenda

The appearance of national legal digital currency is imminent, and the formulation of international standards will follow.

“ITU hopes to become the promoter of the central bank’s legal digital currency security and technical standards, and is preparing to establish a ‘future currency laboratory’ with world-class institutions and universities. The laboratory is mainly composed of ITU legal digital currency members, including BIS, IMF, BRICs bank and other international institutions, as well as a number of central banks, fintech companies and financial institutions around the world to discuss the central bank’s legal digital currency There are common contents in the monetary system, such as how to facilitate the circulation of legal digital currencies between different countries and what security and communication standards need to be formulated, “Wen Wu said.

“This is a bit like the Internet. There is a unified agreement agreed by all participants. In the future, the global digital currency should also be promoted through central banks, first-class scientific research institutions and relevant commercial companies.” Wen Wu believes.

Not optimistic about super sovereign currencies

Wenwu is not optimistic about the so-called “super sovereign currency” in the industry. In his view, any innovation can not ignore the differences of law, geography and economy.

He believes that more than 200 countries and regions around the world have monetary laws and usually designate the central bank (or the Ministry of Finance) to issue sovereign currencies. The important function of sovereign currency is that it can regulate the country’s macro-economy by means of interest rate, foreign exchange reserves and debt issuance. On the premise that the law and the above functions remain unchanged, it is difficult to have super sovereign currency in the process of promoting legal digital currency, but regional legal digital currency can appear.

The Libra coin launched by American company Facebook has an important impact on the currency ecology. At present, Facebook Libra coin project has two different promotion directions: one direction is to focus on Issuing Libra coins; The other direction is to position it as a Facebook wallet. In essence, this is also a two-level problem of digital currency: one is the issue right of currency and the digitization of assets; The other is the problem of cross-border money circulation under the existing regulatory framework, which requires completely different solutions.

“I think Facebook should open up the circulation link rather than challenge the legal digital currency of central banks. Facebook can choose to be a channel to connect the legal digital currency of various countries, otherwise it will bring greater difficulties to the promotion of Facebook wallet.” he believes that the era when a company can decide global problems is over, Different countries have different regulations. To be a global currency, we must first ensure that it is compliant.

Regional legal tender may appear. Wen Wu said that there may be a regional legal digital currency in Africa. At present, many African countries are rapidly promoting mobile wallet to realize inclusive finance, but cross-border transfer is still through the traditional banking system, and the cost is very high. Some countries with equivalent geographical and economic levels and mature digital communication can consider realizing regional fiat currency alliance through Fiat digital currency technology, so as to greatly reduce the cost of cash and cross-border payment.

Responsible editor: CT

Leave a Reply

Your email address will not be published. Required fields are marked *