Wang Xin, Director of the Research Bureau of the Central Bank: The State Council has approved the research and development of the central bank's digital currency

Facebook Libra and cryptocurrencies are gaining more and more attention from senior government officials.
At the launch ceremony of the Digital Finance Open Research Program and the first academic seminar held on July 8, Wang Xin, director of the Research Department of the People's Bank of China, revealed that the State Council has officially approved the research and development of the central bank's digital currency , and the central bank is currently organizing market institutions to carry out corresponding work.
In his speech, Wang Xin introduced the latest research on Facebook Libra, central bank digital currency and digital finance. Wang Xin said that the development of technology has made past transactions and industry restrictions no longer exist in the digital age. If Facebook Libra and other stablecoins are widely used as payment tools, they can play a greater role in currency functions, thereby impacting legal tender and reducing the effectiveness of monetary policy.
"Behind the currency are interests, power, international politics, and diplomacy. If a payment tool plays the role of currency, it will inevitably impact legal tender, thus having a direct impact on a country's monetary regulation, financial regulation, and all aspects."
In addition, Wang Xin also discussed how to respond to the challenge of Libra and strengthen international cooperation in digital finance. The core content includes the following 10 points

In 2014, under the advocacy of Zhou Xiaochuan, the then governor of the People's Bank of China, the central bank had already begun research and development work on digital currency and central bank digital currency .

When Facebook launched Libra, the central bank’s digital finance research platform was established at the same time, with the support of Alibaba’s Ant Financial.

Now that the central bank has obtained formal approval from the State Council, it is organizing market institutions to carry out research and development of central bank digital currency .

The research and development of the central bank's digital currency is currently managed by the central bank's Monetary Fund Department, and Wang Xin is the head of the central bank's Monetary Fund Department.

The central bank once worried that cryptocurrencies such as Bitcoin would replace legal tender in some aspects. However, due to the violent price fluctuations and inconvenience in trading, the central bank ultimately believed that cryptocurrencies such as Bitcoin would not replace real currencies to a large extent in terms of their impact on financial stability and monetary policy.

However, the launch of Libra has attracted great attention from the central bank. Because it calls itself a basket of currencies, it has solved the problems of trust and widespread use to a certain extent. In addition, it is based on Facebook's large social network platform. With further use, it may play a role in the payment field in the future and may also exercise monetary functions. This may have a significant impact on the monetary policies, financial stability and even the international monetary system of various countries.

In order to promote the research and development of the central bank's digital currency , the central bank has specially established the Central Bank Digital Currency Research Institute, and has been working closely with local authorities in cities such as Shenzhen to carry out system research and development.

How to deal with the challenge of Libra? The current ideas include: accelerating the launch of central bank digital currencies , countries issuing their own Libra-like products, and the IMF (International Monetary Fund) previously proposed issuing a super-sovereign digital currency.

Reflection on the regulation of cryptocurrencies : In the past few years, we (the central bank) have adopted a very strict attitude towards virtual currencies and virtual assets. After Libra, what attitude and strategy should we adopt?

In the field of digital finance, we need to strengthen international coordination and cooperation, and we especially need to make China's voice heard as soon as possible. China's voice does not necessarily represent the voice of the government, but also the voices of many important markets and the people.