Digital yuan Chinese ambition American impatience December 25 16:18
Cashless payment, which has become popular in Japan.
In China, the concept of going beyond that is now being pursued.
"Digital RMB"
The idea is to replace bills and coins with "digital currency" used on the Internet.
In the United States, there is a desire to get rid of the "yoke of the dollar" in the future, and the United States is becoming more vigilant. (China Bureau reporter Minoru Yoshida Washington branch bureau reporter Yosuke Yoshitake)
"Digital RMB" concept revealed!
In October 2019, speeches from executives of Chinese government think tanks attracted considerable attention.
That is why the Digital RMB concept was mentioned.
The executive stated that the People's Bank of China (the Central Bank of China) would be the first digital currency issuing central bank in the world.
It sounds abrupt, but in fact, the People's Bank of China formed a specialized research team on digital currency in 2014. In 2017, the Digital Monetary Research Institute was established, and preparations were being made steadily.
What is Digital RMB?
There is a growing trend to digitize money (and similar), such as e-money spread in Japan, Facebook's planned Libra, and crypto assets such as Bitcoin.
However, the digital RMB is very different.
Traditionally, electronic money is issued by the private sector, so companies that provide services and affiliated stores are limited.
However, since the digital RMB is issued by the central bank, it is expected to be usable by anyone and anywhere without going through a bank account.
There is also a big difference in the value of currency.
The value of cryptocurrencies could fluctuate due to speculative movements. To address this, Libra states that the issuance will be backed by multiple national currencies and government bonds.
On the other hand, the digital RMB is the same legal currency as the RMB currently in circulation in the first place, so it is believed that the value of the digital RMB will be stable based on the trust in the government.
Why is China ahead?
Here are two reasons why China leads other countries in issuing digital currencies.
The first is the penetration of a cashless society.
In China, smartphone payments are everywhere in society, with more than 600 million users.
A man interviewed in front of the stall said, "All my daily payments are on my smartphone. I haven't used cash for two months."
In China, which is already used to cashless payments, the introduction of the digital renminbi will not cause much confusion.
Another reason is that we are ahead in the development of blockchain, a technology that supports the digital RMB.
This technology records data simultaneously on multiple computers on a network and shares the information.
It is said that it is highly secure because it is difficult to falsify and can be managed at low cost.
In China, there are more than 27,000 affiliates of this technology, and the number of patent applications has been the highest in the world for the second consecutive year. To the end of October Xi Jinping Jintao himself, block chain was instructed to as it is key technology to support the future of finance, promote development.
The use of blockchain, which is difficult to falsify data, will prevent digital RMB "forgery" and increase reliability.
Aim for Digital Yuan (1)
What is the aim of the Chinese government to introduce the digital RMB? Prof. Zhao Xun, a professor at People's University of China, who is familiar with China's financial issues, will address crime prevention in addition to improving payment convenience.
With the introduction of digital currencies, all money exchanges can be left as data.
Chinese authorities say that "anonymity is guaranteed," but if we can track "when, where, and how" money is exchanged, deterring crime such as fraud, tax evasion, and money laundering, It is expected that it will exert considerable power.
Aim for Digital Yuan (2)
Another aim is "internationalization of the RMB".
Although China has become the world's largest trading power, only 2% of the yuan is used for international payments.
In contrast, the US dollar has an overwhelming share of 40%. Most of the key resources, especially oil, are traded in dollars.
Currently, the SWIFT system, which is the center of international settlement, requires that Chinese and Japanese transactions go through US banks when using dollars.
This means that all financial transactions go to the United States. It is a mechanism that can be called a “dollar yoke”.
However, some critics say that this system is time-consuming and expensive.
Digital currencies, on the other hand, will be able to send money around the world at low cost and in a short time.
China is now strengthening its ties with neighboring Southeast Asian and African countries through the international initiative Belt and Road. It may not only escape US surveillance, but also challenge the dollar economy someday.
Security threats over US dollar sanctions
In the United States, the digital RMB is becoming increasingly vigilant.
In late November, the worst scenario due to the spread of the digital renminbi was discussed at Harvard University.
Simulated meeting by the government assuming an emergency.
The setting is that two years later, North Korea had purchased nuclear missile materials using the digital RMB and successfully launched missiles off the coast of Guam, and experts from the United States, including former ministers and scholars, said. I attended.
In the past, the United States has been truncating the use of the dollar as economic sanctions against rival states and terrorist support organizations.
If the dollar that controls international finance becomes unavailable, imports and exports will be restricted and the economy will not stabilize.
But if more countries use the RMB instead of the dollar, that effect could be diminished.
"The digital renminbi will strengthen China's economic power and weaken the United States," said former Secretary of Defense Carter.
"We must continue to innovate and take seriously that maintaining the dollar's competitiveness is directly linked to national security," said Neha Narra, a Massachusetts Institute of Technology researching digital currency. It is necessary to find out. "
The heated debate has highlighted the implications of threats felt by the United States.
The dollar does not shake
Still, the Trump administration, which has a strong United States, has shown no apparent opposition to the digital yuan.
On December 5, at a parliamentary hearing, Treasury Secretary Mnuchin was asked by a member of the Diet "Do you not own your own digital currency like China?"
"China issues a digital yuan to track domestic money flows, but the Fed already has a tracking mechanism. We believe that there will be no need to issue a digital currency for the next five years."
They denied issuing a "digital dollar" by the central bank.
However, while claiming the superiority of the dollar, saying in the next five years ... seems to be a bit of a digital RMB threat.
Also of note is the US government's stance on Facebook's Libra.
It is pointed out that Libra may be spread all over the world at once by examining the ease of use in everyday life.
However, the United States government has a policy to provide the strict regulations, the prospect of the issue is no longer stand.
However, as the introduction of the digital RMB is likely to be imminent, there is increasing interest in the world whether the United States will continue to issue digital dollars or continue to deny the issuance of Libra.
The United States and China are facing a wide variety of conflicts, including trade, high technology, and security. Keep an eye on the hegemony of currency, which is a symbol of national power.
Minoru Yoshida, reporter of the General Administration of China, joined the Ministry of Economic Affairs in 2000 and covered finance and trade.
Washington bureau correspondent Yosuke Yoshitake joined the Nagoya Bureau in 2004, and then worked in the Finance Department and the automotive industry in the Economic Department.