On October 28, at the first “2019 Bund Financial Summit” in Shanghai, Huang Qifan, vice chairman of the China International Economic Exchange Center and former mayor of Chongqing, said that the People’s Bank of China has been studying DCEP (central bank digital currency) for five or six years. At a matured stage, the People’s Bank is likely to be the first central bank in the world to introduce digital currency.
Huang Qifan believes that “the SWIFT and CHIPS systems relying on slow technology updates and difficult security guarantees have no future.” Under the drive of big data platform and blockchain technology, the formation of a new clearing and settlement network has become a consensus in many countries.
Huang Qifan mentioned that the EU, Japan, Russia and other countries are studying the construction of an international cryptocurrency payment network similar to SWIFT to replace SWIFT. More and more financial institutions and blockchain platforms are testing cross-border payments through blockchain. The actual action bypasses the SWIFT and CHIPS global payment systems.
Huang Qifan said decentralised blockchain-based currencies that could compete with sovereign money were inappropriate in the current era and China’s central bank approved digital coin was far more likely to succeed.
Huang insist that Facebook’s Libra is ‘delusional’ project that will never succeed.
“Some companies are trying to challenge sovereign currencies by issuing bitcoin and Libra – this is delusional to me,” Huang said on Monday in his keynote speech at the Bund Summit.
“If commercial companies can issue various currencies, this world will be in chaos. That is equivalent to returning to the primitive society. This is ridiculous, so I personally believe that Facebook’s Libra would never be a success.” He said.
In the process of issuing sovereign digital currency by the central bank, it is necessary to formulate a new rule that enables digital currency to be linked to sovereign credit, national GDP, fiscal revenue, and the gold, and establish an appropriate proportional relationship between them, in addition to improving convenience and security, according to Huang.
The DCEP researched by the central bank is a new encrypted electronic money system based on blockchain technology, Huang said, the significance of DCEP is that it is not a digitization of the existing currency, but an alternative to M0 (cash in circulation). It makes the transaction link rely less on the account, which is conducive to the circulation and internationalization of the RMB.
DCEP will not only change the settlement method and the sovereign currency issuance mechanism among individuals, enterprises, and countries, but also greatly improve the efficiency of the industrial chain operation, bringing about the development of the entire economy and society and human progress, Huang said.
The Shanghai Bund Summit is aimed at a high level of openness necessary for promoting the high-quality development of China’s economy.
The summit expresses its theme that to advance the opening of the financial sector, speed up the process of developing Shanghai into an international financial center, and promote the integration and cooperation between China and the rest of the world.
The inaugural Bund Summit focuses on issues including China’s financial opening, Fintech, and wealth management.
By Winnie Troppie