Sheng Songcheng: why only the central bank central bank digital currency can make money?
The central bank’s China digital currency will be like? There are a variety of rumors.
In the first big data financial forum held in June 24th, the central bank survey division gives a more comprehensive response: first, digital currency issued by the central bank, not to the center; secondly, the existing electronic currency and in different forms, the central bank will likely be the future digital currency block chain technology, has a decentralized currency based on the characteristics of books; third, the central bank in the future digital currency can achieve point of payment and settlement, do not need to use third party central organization.
The people’s Bank of Chinese survey Secretary Sheng Songcheng
The original speech entitled “why digital monetary is the real currency? The following is the speech “:
In January 20, 2016, the people’s Bank of China digital currency seminar held in Beijing. Since the meeting, the central bank digital currency has caused the domestic academic circles and industry wide attention.
For this new thing is controversial and the central bank digital currency fuzzy opinion. Some commentators believe that the central bank will use digital currency issuance and operation framework and other digital currency bitcoin, and that changes in the central bank’s attitude towards bitcoin. There are comments that digital currency technology will enable countries cannot and need not to control the currency, the monetary policy does not exist. In fact, these views are not consistent with the true meaning of the central bank, research design and future issue of digital currency. So, I think from the essence of the currency, the modern currency basis, monetary policy and the modern national relation about personal viewpoints.
First, from the nature of money, in the modern credit currency system, only the national currency is the real currency
At the beginning of 2014, when bitcoin is being sought after and speculation, I continuously published two articles, one is the “virtual currency is not the currency bitcoin — Taking as an example”, there is a “non national idea and bitcoin currency Utopia” first, I clearly bitcoin the virtual currency is not the true sense of the currency.
You know, as a medium of exchange, money is the essential attribute and basic functions. In other functions of money, value function is the serving functions of circulation means and the means of payment, the value of storage functions is a medium of exchange of natural biological functions.
In the era of real money, money has its own intrinsic value, so it can perform these functions of money. However, the modern credit currency or currency itself has no value, why can fulfill the functions of money? This is because the credit currency has the national credit as a support, with the method of compensation and mandatory. National credit is the basic value of currency to fulfill the functions of money, which is the basis of state monopoly monetary issue right.
At the same time, monetary policy is an important means of economic regulation in modern countries. Effect of changes in the money supply to the economy is very extensive. The central banks are making full use of monetary policy to control the economy.
Monetary policy and taxation, police, courts and other state machine, is the foundation of modern national movement, is an important part of the state machine. If the state is a form of social organization is not a fundamental change, on the basis of national credit monetary system will always exist, and other virtual currency bitcoin is not a country’s currency, bitcoin is a technology used at most is also an asset, rather than the true sense of the currency.
Of course, credit money is easy to produce inflation. Bitcoin’s attention, in a sense reflects concerns about credit conditions monetary inflation. So the central banks should strengthen liquidity management, reasonable control of the money supply to keep prices stable.
Two, the central bank is the technology innovation of digital currency notes electronically and beyond the electronic currency, but it does not change the nature of money
The bill is form of currency countries most widely. But note the technical content is low, from the point of view of safety and cost, is the new technology and new products to replace is represent the general trend. Especially with the development of the Internet and the mode of payment, the standard currency is gradually developed into various forms of electronic money.
With the existing electronic currency in different forms, the central bank will likely be the future digital currency block chain technology, has a decentralized currency account based on the characteristics, and to other related technologies including mobile payment, trustworthy and controllable cloud computing, cryptographic algorithm, security chip etc..
The Central Bank of the future digital currency can achieve point of payment and settlement, without the help of the third party central institutions, which will contribute to the construction of China’s new financial infrastructure, to further improve China’s payment system, improve the efficiency of payment and settlement. Also, the central bank digital currency can form a transparent data system, convenience and improve the transparency of economic transactions, reduce tax evasion and money laundering and other illegal and criminal behavior.
Due to the nature of the central bank and private digital currency digital currency is different, the two do not use the same issue and circulation of course framework. President Zhou Xiaochuan once pointed out that the central bank will control the digital currency, the use of technical means, a series of mechanism design and the laws and regulations, to ensure the operation system of digital currency security, beginning the design thought and bitcoin difference.
Technology innovation, three digital currency can replace the currency and monetary policy of the central bank
Technical innovation of digital currency is mainly reflected in the “center”, it is predicted that digital technology will replace the currency currency and monetary policy. It will be proved that this view is wrong, because the key currency and the monetary policy of the Central Bank of the modern economy’s role is irreplaceable.
First, effects of changes in the money supply of the economy is very extensive, monetary policy is one of the main means of modern economic regulation. If the digital currency is widely used but not by the monetary authority control, modern economy will lose an important means of regulation, the economy will not run properly.
Secondly, the monetary authorities to maintain the stability of the currency by the central regulatory mechanism. The value of relative stability is a prerequisite for the currency to act as a measure of value and means of circulation. If the digital currency is widely accepted by the whole society, and not by the central regulatory mechanism of monetary authorities to stabilize the currency, it will not only cause economic fluctuation, also will shake on the basis of national credit monetary system.
Finally, although the fiscal policy is to adjust the total amount, but the fine-tuning of monetary policy function is more obvious. The tax, treasury and budget and other means of fiscal policy, in a certain period of time, once established it is very rigid, can not easily change, but the monetary policy is relatively flexible.
Therefore, monetary policy is one of the most important means of national economic regulation. President Zhou Xiaochuan also pointed out that the monetary mechanism and the money supply is adjusted. Overall, the Central Bank of the existing monetary policy regulation, the money supply and the creation of channel of transmission mechanism of monetary policy, are fully considered in the design of digital currency.
Four, the Central Bank of the digital currency will increase the money supply and monetary policy
The current technology development situation, the effectiveness of central bank monetary figures will probably increase the money supply and monetary policy from the following aspects.
First, the central bank digital currency to provide data basis for the huge monetary policy and macro Prudential policy, according to the real-time trading books need to collect different frequency and different institutions so that the regulatory authorities, and is complete and true. This information advantage can help the central bank more accurate and more flexible use of policy tools.
Secondly, the central bank currency digital technology can track the flow of funds, can help the authorities comprehensive monitoring and assessment of financial risk.
Finally, the central bank has to digital currency interest rate transmission of monetary policy. The support point of payment and settlement currency digital technology, which can improve the liquidity of the market participants. Only the central bank to digital currency is accepted by the whole society will be the advantages of radiation to different financial market participants, so as to improve the liquidity of the financial market. This will make the term structure of interest rate transmission mechanism more smooth, more smoothly.
In short, the central bank and the private nature of digital currency digital currency is completely different, only the central bank is the national digital currency credit support, in order to become a real currency. Although the central bank may use digital currency and private digital currency like the underlying technology, but different nature determines that the two will use different circulation framework. Digital technology will enhance the monetary control of central bank currency issuance and circulation, so that the operation of monetary policy conduction and more effective, also can make the monetary policy to better serve economic stability and development.