Digital currency should seek to unify national interests and international trust!

For any sovereign country, how to control the dominance of digital currency is a major challenge that cannot be avoided in currency issuance and financial system transformation. The construction and development of digital currency in my country should closely follow the principle of unifying national interests and international trust to adapt to the development trend of alternative currencies and the increasingly fierce international currency competition.

Since the central bank's digital currency seminar was held in Beijing at the beginning of the year, the central bank's digital currency has attracted widespread attention from academia and industry. Recently, Sheng Songcheng, director of the central bank's survey and statistics department, put forward the view that "only the central bank's digital currency is real currency" at the first big data financial forum, which triggered heated discussions in society. Based on the nature of currency and its social attributes and technicality, the author believes that the construction of digital currency should follow the principle of unity of national interests and international trust to adapt to the development trend of alternative currencies and the increasingly fierce international currency competition.

Regarding the nature of money, there is a well-known view that money acts as a general equivalent. With the historical process of the development of metal currency to paper currency, banknotes acted as currency, gradually transitioning from the credit of a certain bank to the credit of the state. Under the sovereign state system, paper currency has become the main form of currency in modern society. The nature of money has thus evolved into a symbol of value. Whether from the various materials and objects used as currency in the early human society, or from the current commonly used paper currency and digital currency in the Internet era, money is a symbol of value that is commonly accepted and used by people at a certain historical development stage and within a certain geographical scope. Some of them have value in themselves, while others do not. In today's situation, most of them are forced to be accepted by state power, and there are also cases where they naturally evolve into voluntary acceptance, that is, they meet the "multiple demand coupling" rule. Therefore, it is not the currency issued by a certain department that meets the nature of money. In fact, the Treasury Department of the United States and other countries is responsible for the printing and issuance of US dollars, while its central bank is responsible for the allocation of monetary resources. Of course, the government does not want virtual currencies such as Bitcoin to be widely popular, because thousands of years of monetary history tell us that currency issuers want to have more control over the money supply, not the other way around. However, in the Internet era, the monetary center will become diversified, that is, the so-called "decentralization" trend. For any sovereign country, how to control the dominance of digital currency is a major challenge that cannot be avoided in any way in the transformation of currency issuance and financial system.

Social scientist Mary Mellor believes that money should be regarded as a public resource that is shared by all people, just like water and air. However, in the existing monetary system, money has been partially privatized and controlled by the banking cartel and the government. This situation not only occurs in one or two countries such as the United States, but also in most countries. During the 2008 financial crisis, the government used taxpayers' money to save financial institutions that were on the verge of bankruptcy. The interdependence between banks and governments emerged, which undermined the public's confidence in financial institutions and government departments. After the financial crisis, the Occupy Wall Street movement took place, and there were demands for the reform of the existing monetary system and the reorganization of the government and banks. It is believed that the financial system or the monetary system should be combined into one, no longer dominated by the central bank, but instead managed by elected representatives or even the people. This is the Internet era, based on the development of the sharing economy, the construction of digital currency requires democratic management.

The history of currency in human society is generally a process from metal currency to paper currency, and then to digital currency. In fact, it is an evolution from hard currency to soft currency, from tangible to intangible, and from low security, high cost and bulkiness to high security, low cost and convenience. Increasingly digital, formless and invisible, this is the path that currency has taken with the development of social economy and science and technology. The development of digital technology has not only helped the soft currency system, but also the hard currency system. Digital currency has gradually replaced paper currency to become the protagonist of the currency system, which may be the future of currency. In fact, Bitcoin is not only a currency, but also a technical protocol. It solves the problem of repeated spending that digital currency has suffered in the process of development, that is, it is easy to be copied and cause fraudulent transactions. This protocol technology allows any digitized item (such as currency or a music file) to be transferred but not copied, so it is safe and reliable. Bitcoin and digital currency are mainly based on blockchain technology, and also involve related technologies such as mobile payment, trusted and controllable cloud computing, cryptographic algorithms, and security chips. However, from the perspective of security and technical commanding heights, technology research and development and selection have become key issues facing countries in developing digital currencies. This is not the responsibility of a single department, nor can it be undertaken by a single department alone. It is a systematic project of cross-border cooperation based on national interests.

Based on these understandings, the author puts forward several policy recommendations on the construction and development of my country's digital currency, centering on the principle of unity of national interests and international trust.

First, a cross-departmental national digital currency development strategy committee should be established as soon as possible. Digital currency not only involves the digitization of financial assets such as securities and insurance, but also widely involves the digitization of physical assets such as automobiles, houses and land, and movable and immovable properties. Therefore, in addition to the central bank, the traditional currency issuance authority, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission, and the ministries and commissions of finance, development and reform, industry and information technology, commerce, land, science and technology should also be included in the National Digital Currency Development Strategy Committee. Based on national interests and in compliance with national strategies, cross-departmental collaborative research should be carried out. On the basis of existing digital currency technology, we should strive to occupy the international commanding heights in the field of digital currency technology and seize the initiative.

Second, digital currency research and pilot projects should adopt a competitive and open attitude. my country's digital currency is still in its infancy. It is advisable to entrust two different departments to carry out digital currency research and pilot projects with different technical directions. Large e-commerce companies can be encouraged and supported to carry out relevant research on digital currency, and fully tap and give play to folk wisdom resources. Under a sovereign state, the use of any digital currency is unlikely to truly threaten the status of mainstream legal tender, and the government can decide which currency can be regarded as legal tender on the mainland. In this way, we can prevent closed-door development, compare the advantages and disadvantages of different plans, get close to the real world, and serve national interests and strategies.

Third, take advantage of the historical opportunity of developing digital currency to promote the transformation and reconstruction of currency issuance and monetary policy system. Under the current central bank management system, on the one hand, it is difficult for currency issuance to adapt to the requirements and trends of digital currency based on encryption algorithms, mathematics and decentralized authentication systems to become transparent and convenient. On the other hand, it is also difficult to adapt to the internationalization of RMB, which requires strong national strength and a check and balance mechanism for decision-making. Drawing on the experience of countries with successful currency internationalization, it is recommended to redistribute the rights to manufacture and issue digital currency and the rights to allocate monetary resources between the central bank and other relevant departments, and be responsible to and subject to the supervision of the National People's Congress, forming a "triangle" check and balance relationship, and further win the trust of the international community for the RMB internationalization strategy.

Fourth, while promoting the development of digital currency, continue to increase gold reserves. Increasing gold reserves is a tradition of central banks in major countries. Huge gold reserves can maintain the value of digital currency and balance people's psychological losses on digital currency.