Wang Yongli: Thoughts on the Positioning of Digital RMB

Introduction The positioning of digital renminbi is a very important core issue involving many aspects of digital renminbi functions, operation and management, and must be accurately grasped. This paper points out that digital renminbi should never be limited to replacing cash, and should not only be applied to payment and settlement, but should be widely used in all financial businesses, and promote digital renminbi and its operating system to replace all traditional renminbi and its operating system as soon as possible. Text/Wang Yongli, former vice president of the Bank of China, starting in October 2020, the digital renminbi has been launched in Shenzhen, Suzhou and other places, with the participation of tens of thousands of individuals, thousands of businesses and designated operating institutions, with an amount of 10 million to 20 million yuan. The scale of public testing, the digital renminbi is getting closer and closer to the actual operation state. However, the current positioning of the digital renminbi still needs careful consideration and further thinking. According to the authoritative explanation of the article "Analysis of the Policy Implications of Digital RMB M0 Positioning" published by Fan Yifei, the deputy governor of the People's Bank of China in September 2020, the digital RMB is a legal currency in digital form issued by the People's Bank of China. Designated commercial banks participate in the operation and exchange to the public. Based on the generalized account system, it supports the loose coupling function of bank accounts, is equivalent to banknotes and coins, has value characteristics and legal compensation, and supports controllable anonymity. The digital renminbi is mainly positioned as cash in circulation (M0), and no interest is calculated. The central bank does not charge the issuing layer for exchange (exchange, exchange) service fees (the central bank needs to allocate issuance fees and establish a reasonable and effective incentive mechanism). Banks also do not charge customers for digital renminbi exchange service fees. The author believes that the central bank positions the digital renminbi at M0. The main considerations are as follows: First, with the development of information technology, wholesale funds have been digitized relying on the payment system, supporting inter-bank payments in the circulation of narrow money (M1) and broad money (M2) Clearing systems (such as large and small amount payment systems and online payment cross-bank clearing systems, etc.), commercial bank internal systems, and non-bank payment institutions and other payment systems have been continuously improved and upgraded to better meet the needs of economic development. Replacing M1 and M2 with digital renminbi will not help improve payment efficiency, but will also cause a huge waste of existing systems and resources. The second is that although the cash utilization rate is on a downward trend, the absolute number is still growing to a certain extent, indicating that the digital supply of legal tender in the retail sector has not kept up with changes in demand. It is necessary to use new technologies to digitize M0 and complement the existing electronic payment system. It is necessary to maintain the attributes and characteristics of M0, and to derive new functions different from electronic payment tools based on value attributes, so as to provide versatility for the development of the digital economy. base currency. Wang Yongli, former deputy governor of the central bank: After the launch of the "central bank digital currency", the role of ants and other institutions will be greatly reduced: On the morning of November 21, at the parallel seminar of the 2020 "Understanding China" International Conference, the former deputy bank of the People's Bank of China Chang Wang Yongli said that the only thing that can really exist and develop as a "digital currency" in the future is the "central bank digital currency", which will promote profound changes in the operation mode, system and mechanism of currency payment, and the central bank can form the most complete digital currency in the whole society. Currency user information and transaction data, while the payment institution can only grasp the relevant information of its own customers, and no longer has all the information of both parties to the transaction. "It can be said that after the launch of the 'central bank digital currency', the role of Ant Financial and other institutions will be greatly weakened." (Southern Newspaper) [2020/11/21 21:34:56] The third is to maintain the central bank's role in the issuance of digital renminbi Centralized management status, mainly including: overall management of digital renminbi quotas, formulation of unified business standards, technical specifications, safety standards and application standards; overall management of digital renminbi information, and control of digital renminbi exchange and circulation by mastering the full amount of transaction information. Record and monitor and analyze, prevent and combat money laundering, terrorist financing and tax evasion and other illegal and criminal acts, and improve the central bank issuance system in the digital age; coordinate the management of digital RMB wallets, and adhere to the premise of a unified cognitive system and anti-counterfeiting functions of digital RMB. The principle of two-tier operation adopts the method of co-construction and sharing, and the central bank and designated operating agencies jointly develop the wallet ecological platform, while realizing their own visual recognition and characteristic functions; coordinate the construction of digital renminbi issuance infrastructure, and establish a controllable anonymity mechanism for digital renminbi , Realize interoperability across operating agencies, break retail payment barriers and market segmentation, avoid market distortions, protect consumer rights, and ensure a stable and orderly circulation of digital renminbi. Fourth, the digital renminbi will cooperate with commercial banks designated by the central bank to operate with other commercial banks and related institutions. On the basis of clarifying the relationship between responsibilities and rights, they will jointly provide circulation services to the public. Specifically, the commercial bank as the designated operating institution is responsible for opening different types of digital renminbi wallets for customers according to the strength of customer information identification under the quota management of the People's Bank of China, and performing digital renminbi exchange and redemption services. At the same time, the commercial bank as the designated operating institution, together with other commercial banks and related institutions, undertakes the circulation service of digital renminbi under the supervision of the People's Bank of China, and is responsible for the management of the retail link, so as to realize the safe and efficient operation of digital renminbi, including payment product design innovation, scenario Expansion, marketing, system development, business processing and operation and maintenance services. In this process, it is necessary to maintain a fair competitive environment and ensure that the market plays a decisive role in resource allocation, so as to fully mobilize the enthusiasm and creativity of all parties in the market and maintain the stability of the financial system. On-site | Wang Yongli: Legal digital currency can only be the digitization of legal currency and intelligent operation: Jinse Finance live report, at the "Origin·Symbiosis" sub-forum blockchain + real economy forum of the 2019 Netease Future Conference, the former vice president of the Bank of China President Wang Yongli said in his speech: The development of the blockchain should jump out of the "Bitcoin blockchain" paradigm. The closed blockchain of mining and minting is difficult to solve practical problems. Bitcoin and other network virtual currency or Token and "stable currency". It can only be an online community currency or a business district currency, which must be used within a set range, and cannot be left for free circulation in the business district, and must be strictly regulated. The blockchain is still in the initial stage, the exploratory stage. There is also a triangular dilemma in which "decentralization, high efficiency, and security" cannot be achieved at the same time. Bitcoin is only an implementation of blockchain, not the only paradigm. Blockchain can have different forms such as public chain, private chain, and franchise chain. The central bank can't imitate the Bitcoin mining coinage model to form a "legal digital currency". Think carefully. First, it cannot be considered that digital renminbi can only replace cash in circulation. The central bank stated that the digital renminbi is positioned at M0. Many people simply understand that the digital renminbi can only replace cash in circulation, so no interest is charged, and its receipt, payment and circulation are all free, which will not have a great impact on bank deposits and financial institutions. . Many people even think that digital RMB needs to have different denominations, different patterns, different numbers, etc. like RMB cash, and these factors must be incorporated into confidential codes to achieve full-process monitoring of each currency flow. . However, the author believes that this understanding is actually not accurate. One is that if it is strictly limited that the digital renminbi can only replace cash, then it must be strictly limited that it can only be exchanged with cash, not with deposits. However, in the social betas conducted in Shenzhen, Suzhou and other places, in fact, all of them were exchanged with deposits instead of cash. Second, if the digital renminbi is designed strictly according to the renminbi cash, its efficiency and cost will inevitably be affected. Digital currency can realize wallet encryption and payment monitoring, and realize the monitoring of every payment. It should no longer distinguish different denominations like cash, and track and monitor the flow of each banknote. Otherwise, the digital renminbi The actual use will inevitably involve a lot of currency identification and transaction change, which will increase a lot of operating costs, which is completely superfluous and violates the development logic of "digital currency". Therefore, judging from the situation shown in the public beta, there are no problems with different denominations, patterns, and numbers in digital renminbi. Voice | Wang Yongli, former vice president of Bank of China: The real landing scenarios of Bitcoin are extremely limited: According to Caixin.com, at the 2018 Beijing Financial Security Forum held today, Wang Yongli, former vice president of Bank of China, said that if everyone Bitcoin is used as a currency, and its currency value will soar to the sky, but the scenarios where Bitcoin actually lands are extremely limited. In ordinary transactions, due to the lack of intermediary trust and the fact that both parties to the transaction are anonymous, there will be a problem of distrust; in addition, if it is exchanged with legal currency, legal currency is supported by law, and Bitcoin does not. [2018/12/5] Third, if the digital renminbi is only limited to replacing cash, its scale and role will be very limited. At present, the cash in circulation in my country is about 8 trillion yuan, which cannot be completely replaced. As a result, the actual scale of digital renminbi and its proportion in the total currency will be even smaller. At the same time, if the digital renminbi is only limited to replacing cash, it can only be used for payment, and cannot be used for bank loans, investment bonds, etc., and a new digital renminbi will be derived accordingly. There will be a bottleneck in the growth of digital renminbi, and its actual functions will be blocked. Serious constraints can only become a little supplement to the existing currency payment system, and it is difficult to play a greater role. Moreover, if it is difficult to replace more traditional renminbi as soon as possible, it will result in a long-term coexistence of digital renminbi and traditional renminbi operating systems, which may bring new challenges and troubles to currency management. In this case, the internationalization of digital renminbi is bound to be seriously affected. From this point of view, the understanding that digital renminbi can only replace cash in circulation is not accurate. This positioning will seriously constrain the development of digital renminbi. Second, the most critical issue is how to treat the digital renminbi "wallet". Digital renminbi is not renminbi cash, and its release and circulation still need to rely on "wallets" to achieve. These include: the digital renminbi operating agency (commercial bank) designated by the central bank needs to open a digital renminbi wallet at the central bank, and exchange the digital renminbi with the central bank for digital renminbi with the same amount of renminbi. The central bank can control the total amount of digital renminbi; Units, individuals, other commercial banks or payment institutions, etc. open digital RMB wallets, and handle actual exchange and wallet recharge; units, individuals, commercial banks or payment institutions, etc. that have digital RMB wallets can make digital RMB payments through wallets, realizing Social circulation of digital renminbi. Voice | Wang Yongli: Blockchain is difficult to use in credit games, donations and other individual applications. The prospect is great: Wang Yongli, president of the Strait Blockchain Research Institute, delivered a speech at the China Fortune Forum today. Blockchain cannot be decentralized, efficient, and secure nature, and face the challenge of global standardization that is difficult to coordinate. Therefore, the application of blockchain in credit is still difficult, but it has great prospects in individual applications such as games and donations. [2018/7/9] It can be seen that the "wallet" opened by the digital renminbi owner in the bank or payment institution has become the most important carrier for digital renminbi launch and payment circulation. ", it can only be a temporary application for small-amount emergencies. When the communication conditions are available, it is still necessary to transfer the information to the wallet management agency as soon as possible to adjust the wallet balance in time. Otherwise, you may face great risks. Different from the transfer and settlement of traditional renminbi through banks or payment institutions, the specific operation of digital renminbi exchange and payment circulation must not only meet the needs of wallet management agencies to adjust the wallet balances of the two parties, but also meet the needs of the central bank for overall management of digital currency. Renminbi information, and the need to record and monitor the exchange and circulation of digital renminbi by mastering the full amount of transaction information. Therefore, on the basis of adhering to the basic structure of the "dual mode" of the actual operation of the digital renminbi, it is necessary to add an information system that meets the verification and monitoring of the central bank. The specific method is: in order to obtain and use digital renminbi, individuals, businesses, units, and financial institutions must download the central bank’s unified digital renminbi application (App), send user information to the central bank, and establish a “digital renminbi user’s account” in the central bank. Only by opening a digital renminbi “physical wallet” through an exchange bank selected by the central bank can the exchange and use of traditional renminbi and digital renminbi be carried out; for each exchange and use of digital renminbi, the information must be sent to the central bank simultaneously Process and check with the wallet management agency on the reference account and the physical wallet. In this way, although the central bank does not handle specific businesses for the public, it can obtain the most complete user information and transaction data of the digital renminbi through a unified app, enabling the central bank to conduct comprehensive monitoring of the total amount and specific distribution of digital renminbi, as well as the entire process of payment and circulation. Real-time monitoring, thereby greatly improving the accuracy and effectiveness of monetary policy. The central bank has the most complete big data on digital RMB users and transactions in the whole society. It can establish a controllable anonymous mechanism for digital RMB, realize cross-operating organization interconnection, break retail payment barriers and market segmentation, weaken the data monopoly advantages that commercial institutions may form, and maintain Social fair competition environment, etc., so as to create a new way and system mechanism of monetary and financial operation. It can be said that this will be the biggest change and significance of the launch and operation of the digital renminbi, although the front-end personal or merchant payment experience is not much different from the current mobile payment. Wang Yongli of Renmin University of China: The key to the Internet blockchain is the chain: The 2018 International Blockchain Development and Innovation Conference was held in Beijing on the 28th. Wang Yongli, an academic member of the International Monetary Institute of Renmin University of China, believes that the operation of the Internet blockchain is the most critical It is to ensure that assets or values in the real world, various physical documents, images, etc., can be efficiently and accurately pushed to online operations, and ensure their legitimacy, authenticity, accuracy, and integrity from the source . [2018/5/1] In this way, the "wallet" is essentially a new type of deposit account. Although many people emphasize that the acquisition and operation of the digital renminbi is no longer based on the existing bank deposit account, although it remains loosely coupled with the bank deposit account, the use of new technologies to achieve account "Token" or intelligence, and its operation method may be different from that of the bank deposit account. Bank deposit accounts are different, so the digital RMB account is deliberately called a "wallet". However, the digital RMB wallet is still an account in essence, and the money in the digital RMB wallet is definitely no longer cash, but in the wallet management institution deposits. This leads to a key question: Among the many digital renminbi wallets maintained by banks, there will always be more or less unused parts. Then, can banks issue loans or use digital renminbi under the premise of ensuring the liquidity of digital renminbi? Buy bonds, etc., and derive a new digital renminbi accordingly? This requires finding an answer from the credit currency delivery mechanism. After the currency is separated from the natural physical currency and transformed into a pure national credit currency, there are two main ways or methods of currency distribution: one is that the currency distribution institution distributes currency by purchasing gold or foreign exchange (international hard currency). This is the base currency in the strictest sense.

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