Central Bank Magazine: Legal digital currency has the conditions for implementation and is accelerating its issuance

"China Finance": On September 19, the 17th issue of "China Finance", the financial magazine under the jurisdiction of the People's Bank of China, published an article entitled "New Opportunities for the Development of China's Legal Digital Currency", stating that the People's Bank of China began research on legal digital currency in 2014. In January 2017, the Digital Currency Research Institute of the People's Bank of China was officially established. As of April 2020, it had submitted 22, 65 and 43 patent applications for digital currency and related content, covering the entire process of issuance, circulation and application of digital currency, forming a complete industrial chain, completing technical reserves, and meeting the conditions for implementation.

China is actively and steadily promoting legal digital currency

First, further strengthen the publicity and popularization of legal digital currency, summarize the pilot experience, and expand the application scenarios. At present, China's legal digital currency is steadily advancing in accordance with the principle of gradual progress, and small-scale pilots have been carried out in many places. However, the public's understanding of legal digital currency is not comprehensive enough. Some people equate digital currency with "coin speculation" and speculation. Some institutions even use the name of the central bank to launch so-called "legal digital currency products" to engage in fraud and pyramid selling. Before the issuance of legal digital currency, more legal digital currency knowledge should be popularized to the public through multimedia means to create a good use environment. At the same time, it is necessary to examine the use effect of the pilot area, pay attention to market demand, summarize and accumulate experience, track and investigate the impact of legal digital currency on the existing system, ensure the convenience, security and efficiency of the use of legal digital currency, improve the initiative of market acceptance, and gradually promote it to the whole country. In addition, it is necessary to start the issuance and pilot work of legal digital currency in the public sector in a timely manner.

Second, in line with the development trend of the digital economy, a new regulatory model for legal digital currency should be established, and the construction of supporting systems should be accelerated. At present, the digital economy is profoundly affecting all areas of the national economy. In the future, legal digital currency will coexist and promote the digital economy, continuously promote the integration of new technologies, new formats and new models, and promote high-quality economic development. The central bank should accelerate the construction of supporting systems for legal digital currency, and seek a balance between government and market, security and efficiency, innovation and regulation. On the basis of traditional regulatory methods, a new regulatory method should be established, a series of special laws and regulations on legal digital currency should be formulated, and corresponding digital financial regulatory systems should be provided in the entire process of issuance, circulation and application of legal digital currency, and national standards for the issuance of digital currency should be formulated to crack down on illegal speculation in digital currency, provide perfect legal protection for the new monetary system, and promote the sustainable and healthy development of legal digital currency and digital economy.

Third, strengthen theoretical and empirical research, improve the effectiveness of monetary policy, and help economic recovery . Legal digital currency will enable the central bank to more accurately measure data such as money supply, circulation velocity, and money multiplier, thereby improving the effectiveness and accuracy of monetary policy. In the pilot areas of legal digital currency, big data should be used to strengthen statistical monitoring, and relevant data should be used to carry out theoretical model construction and empirical research. It is also possible to conduct comparative studies between pilot areas and non-pilot areas, and to conduct international comparative studies to summarize the advantages of issuing legal digital currency, so as to lay a good foundation for the policy framework and theoretical basis for comprehensive promotion and post-epidemic economic recovery.

Fourth, participate in the global governance of digital finance, strengthen international cooperation, and master the dominance and discourse power of legal digital currency . With the development of Internet technology, digital currency is entirely possible to break through the constraints of the existing monetary system and become a "world currency". Digital currency competition occupies a core position in the future global digital economy competition. It is necessary for China to "overtake on the curve", study the path to achieve the internationalization of the RMB in the era of digital currency, and explore the feasibility of issuing a global digital currency led by China that can be used across borders. In addition, in the construction of the global digital financial system, China should actively participate and strive for the right to speak, cooperate with other countries that are developing legal digital currency, participate in the formulation of unified international regulatory standards for legal digital currency, master intellectual property rights in key areas of digital technology, and strive to establish global competitive advantages in key areas of the digital economy.

Fifth, make good use of the first-mover advantage, seize the first track, and relentlessly accelerate the issuance of legal digital currency. Currency has an inherent monopoly. The issuance and circulation of digital currency will bring about tremendous changes and impacts on the existing international monetary system, clearing system, and financial system. Therefore, the right to issue and control digital currency will become a "new battlefield" for competition among sovereign states. China has many advantages and opportunities in issuing legal digital currency. It should accelerate the first track, give full play to the network effect, and gain the upper hand. (China CECBC)