In mid-April 2020, a photo of the central bank of China's digital currency in the Agricultural Bank of China's account was circulated on the Internet. Many people began to cheer: "Digital RMB, coming!" On April 16, 2020, the second edition of Libra's white paper proposed major revisions, such as adding a single currency stable currency, improving its payment security, and introducing strong protection measures in the design of the Libra legal currency reserve pool.

During the New Coronavirus pandemic, China and the United States frequently acted on digital currencies, which the author believe is not accidental. This is the embodiment of the two countries competing for the right to speak and strategic commanding heights in the field of digital currency and blockchain technology. However, whether it is the digital Renminbi issued by the Central Bank or Libra dominated by the company (Facebook), there is still a certain distance from the application.

The relevant person in charge of the Digital Currency Research Institute of the People's Bank of China stated that the current digital renminbi system (DC/EP) information transmitted on the Internet is the test content in the technology research and development process, and does not mean that the digital renminbi is officially issued. The current closed test of digital RMB will not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, financial market, and social economy outside the test environment.

In December 2019, Mu Changchun, Director of the Digital Currency Research Institute of the People's Bank of China, said that the digital RMB developed by the People's Bank is not an encrypted asset that everyone understands, but the digitization of the RMB. Therefore, the central bank digital currency is legal currency, which is equivalent to legal currency. It has national credit, legal compensation, and its effectiveness and security are the highest. When using digital currency, no network or bank account is needed. As long as the mobile phone is equipped with a DC/EP digital wallet, the transfer function can be realized by touching the two mobile phones, which is called "dual offline payment" for both parties.

When digital currency is issued, a two-tier operating model is implemented, that is, the People's Bank of China first exchanges digital currency to banks or other operating institutions, and then these institutions exchange to the public to ensure that the central bank's digital currency does not exceed the issuance of digital currency and will not cause inflation. Libra has many flaws. Compared with the central bank's digital currency, Libra has a huge number of potential users, all over the world, involving all users of Facebook, Instagram, WhatsApp and other platforms. Libra is suitable for cross-border payment/remittance, and also suitable for value storage. While possessing the above "advantages", Libra also faces many challenges: first, currency value/exchange rate instability; second, threats to the currency and economic stability of other sovereign countries, which may cause chaos in the international monetary system; third, compared with central banks , The Libra Association is difficult to be neutral; the last point is that the protection of user privacy is worrying.

Blockchain empowers new infrastructure

PBOC and Facebook, one of which is a Chinese government department and the other is an American company, have different thinking models and different regulatory experience and sense of responsibility. Libra's vision is extremely ambitious, but Facebook has limited capabilities and it is difficult to assume responsibilities similar to the "central bank". The central bank's digital currency (DC/EP) has been researched for six years, and has been implemented in the four pilot cities of Shenzhen, Xiong'an, Suzhou, and Chengdu by means of wages and subsidies. It is progressive and well prepared.

Although PBOC's digital currency does not formally use blockchain technology, it applies the core concepts and thinking of blockchain such as smart contracts in the underlying technology. The author believes that in addition to digital currency, blockchain has a lot to do in empowering the real economy. As Ma Huateng pointed out in the preface of the book "Industrial Blockchain", today's blockchain is expected to surpass Bitcoin, as long as it stays away from fanatical hype, starts from the bottom, and begins to climb the long slope of the industrial Internet. Especially after the COVID-19 pandemic has been blocked, the central government has promoted the acceleration of "new infrastructure" to a new level. Blockchain is being organically integrated with cloud computing, 5G (fifth generation communication technology) communication, artificial intelligence and other information technologies , and they together constitute an important infrastructure for the digital economy and smart society. Just like the electricity consumption in the industrial age, the future "chain consumption" may be combined with the "cloud consumption", and then together become an important indicator of the economy and society in the digital age.

On 22 April 2020, the official public account of People's Daily Online published an article that the scale of the global digital economy in 2019 reached 15.6 trillion US dollars, accounting for 19.7% of the global economy. It is estimated that this proportion will reach 24.3% by 2025. The growth rate of the digital economy is 3.5 times that of the global economy. In the scale of the "new infrastructure" segmented industry in 2025, the blockchain will reach 38.9 billion yuan. The "new infrastructure" represented by the blockchain is bound to profoundly influence and reshape our economic organization, financial organization and social governance model, and bring many opportunities and challenges.

Tony Fu, Senior Research Fellow, INERI