Zhou Xiaochuan talks about digital renminbi: The original intention is to provide convenience to the public, not to make cross-border payments

  China-Singapore Jingwei Client, April 18 (Wei Wei, Xue Yufei) At the Digital Payment and Digital Currency Sub-forum of the Boao Forum for Asia 2021 Annual Conference held on April 18, Boao Forum for Asia Vice Chairman and the 12th National Committee of the Chinese People's Political Consultative Conference Zhou Xiaochuan, the vice chairman and former governor of the People's Bank of China, said that the initial consideration for launching the digital renminbi project was the development of technology, especially mobile terminals that can easily provide payments to the public, not for cross-border payments.

In addition, he emphasized that both digital currencies and digital assets should be closely integrated with the real economy and serve the real economy.

The original intention of the digital renminbi is to provide convenience for the public

  Zhou Xiaochuan, vice chairman of the Boao Forum for Asia, vice chairman of the 12th National Committee of the Chinese People's Political Consultative Conference, and former governor of the People's Bank of China.

Photo by Xue Yufei, Sino-Singapore Jingwei

  Zhou Xiaochuan said that China has a very large retail market with 1.4 billion people, and everyone hopes to move towards a more convenient, more effective, and lower-cost technology system.

Starting from this idea, I didn't think about doing the wholesale system or the internationalization of RMB at first, but started from the retail system.

  How to understand digital currency?

He introduced that in the past, people had to pay money by taking it out of the wallet, but this wallet has become a digital wallet with digitization, and the digital wallet may be used on a network terminal.

"Specifically, many people use their mobile phones. As a digital terminal, the mobile phone has a digital wallet. Then the digital wallet can be used for payment. When paying, the digital wallet is neither banknotes nor coins. It's digital currency."

  "As long as the money taken out of the digital wallet is digital currency, you don't need to care about the payment and settlement system behind it. It does not need to say whether it is a decentralized or centralized system. However, you need to know that you cannot use this system. To launder money, evade taxes, engage in drugs and weapons transactions." Zhou Xiaochuan said.

  He believes that in order to do a good job in the retail system, the improvement of the efficiency of the retail system is the basis for all other businesses. On this basis, there are more possibilities for operations in the wholesale system and cross-border payment.

Cross-border payment is more complicated than imagined

  Zhou Xiaochuan, vice chairman of the Boao Forum for Asia, vice chairman of the 12th National Committee of the Chinese People's Political Consultative Conference, and former governor of the People's Bank of China.

Photo by Xue Yufei, Sino-Singapore Jingwei

  Zhou Xiaochuan pointed out that the initial motivation of the digital renminbi was not to make cross-border payments. Cross-border payment is also a more complicated issue than imagined.

Some people think that digital currency is very convenient to use in China, and it is also very efficient and safe to make cross-border payments convenient.

But think about it carefully. The country-based currency system needs to consider issues such as exchange rate and currency stability when making cross-border payments.

  In his view, every country has its own needs for macro-control and monetary sovereignty. Some countries’ exchange rate systems are different from those of other countries, and some countries have a certain degree of exchange control. These systems are not so easy to do. Cancelled.

  "If you use an international currency or US dollars when making cross-border payments, many emerging markets and developing countries do not want to'domestic dollarization'. If they use US dollars, they may require that the Fed When formulating monetary policy, we must consider global interests. The Fed has made it clear that its policy will only consider the self-interest of the United States." He said that liquidity must also be considered. If the U.S. dollar is used, can the Fed guarantee the liquidity of the U.S. dollar.

  He believes that it is now possible to make a long-term vision, that is, the future global currency may become more integrated or simpler, and there is no such complicated exchange rate issue and foreign exchange control. It is possible to develop in this direction, but it is not possible now.

  However, this does not mean that digital currencies are useless in cross-border payments.

Zhou Xiaochuan said that while respecting the currency sovereignty of various countries, digital technology can still be used to greatly improve the convenience of payment.

Digital currency must serve the real economy

  Zhou Xiaochuan mentioned that when China considers digital currency, it pays special attention to the real economy. Whether it is digital currency or digital assets, it should be closely integrated with the real economy and serve the real economy.

  He further explained that because digital currency supports a large number of payments, it is definitely good for the real economy and is essential. Without these payments, the real economy cannot be transferred.

  What are the benefits of digital assets to the real economy?

In this regard, Zhou Xiaochuan is more cautious.

"After the 2008 global financial crisis, we found that some financial products that were separated from the real economy would have problems. For example, the shadow banking at the time, and some derivatives that everyone criticized at the time, became purely speculative among several financial institutions. Transaction, and has no connection with the real economy, as a result, these products are prone to problems." Zhou Xiaochuan said.

  He pointed out that this kind of derivative does not mean that we should draw conclusions about it now, but we must be careful.

In addition, from the direction of policy encouragement, China's characteristic is to emphasize that financial products, financial services, and innovative institutions should serve the real economy, and make it clear what are the benefits to the real economy.

(Zhongxin Jingwei APP)

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