(本文翻譯自 陳冲 全球央行新願 化雞肋為NFT 2022-02-07)
Those who have read the Romance of the Three Kingdoms might know the famous story that Tsao interpreted the chicken ribs as a metaphor for retreat when marching into Hanzhong and not sure of winning. He said that chicken ribs are those “hardly worth eating but not bad enough to throw away.” So, are delicious chicken ribs possible?
At the beginning of 2022, after many expectations and calls from all over the world, the US Fed finally released a discussion paper to explain its attitude towards CBDC.
It's not exaggerated to say that the paper has been greatly-awaited. In early 2020, the Fed had already been questioned by Congress members and the media as China’s PBoC announced to successfully develop e-CNY (or DCEP). In addition, BIS (Bank for International Settlements) and IMF(International Monetary Fund) researches have pointed out that there are already 110 central banks in the world studying CBDC and that the first CBDC will be launched in 2023. The Fed has no choice but to change tune and said that they were actively doing research and not ruling out the introduction of CBDC. Last May, it even stated that there would be a statement showing their position in the early summer, but it ended up being postponed again and again. Finally, this year, the report was released on Jan 20th, after the hearing re-electing Powell as Fed chair. The report must be meticulously crafted but the publisher must be a group cherishing pen and ink. Attachments deducted, there are only nine pages.
If talking about conclusion, there’s no conclusion. If talking about position, there’s no position. Not only was there no conclusion, but the annex conversely raised twenty questions to ask opinions from people. Even so, the entire report still skillfully presents the chair’s attitude and concerns. For example, to avoid jeopardizing financial stability, it will adopt the two-tier model and distribute CBDC through commercial banks. Also, there might be limit set to control the amount each user could hold. Pros and cons are presented in the report, only the conclusion remains unclear.
Let’s turn to see the central bank head on the west coast of the Pacific Ocean (it can be Zhou Xiaochuan, Yi Gang, or Guo Shuqing. What I refer to is the position since policy continues when people pass the torch.) Since PBoC announced to set up the working group on e-CNY research in 2014, it has quietly conducted related research that can be divided into three dimensions: policy, theory and technique. In 2018, when Digital Currency Research Institute shouted the slogan “CBDC coming soon,” all knew that PBoC is serious this time.
In July and August 2020, four major Chinese banks launched the test and the pilot of DCEP were carried out in four places across the country at the same time. The so-called DCEP (Digital Currency Electronic Payment) is literally different from the CBDC developed by other countries. It’s a combination of fiat money, electronic currency and payment platform, which shows a higher level that is hard for other countries to catch up with. Of course, the risk becomes higher, too.
As of Dec. 31st 2021, there have been over 8 million DCEP pilot payment scenarios with 260 million wallets opened. The transactions amounted to 87.5 billion yuan. It’s large enough in terms of a pilot test. This year, with the Winter Olympics held in Beijing, DCEP is formally introduced to international visitors. In spite of various conspiracy theories, under the beautiful atmosphere of Winter Olympics, DCEP goes along for the ride, rapidly catching people’s eyes.
The ideal CBDC Powell described needs to be privacy-protected, intermediated, widely transferable, and identity-verified. These are features DCEP has. In other words, the US somewhat adopts the research result of China’s. it’s a kind of “learning by others doing.” The content is graceful and the words flowery but no sense of accomplishment. It's just a chicken rib. The Fed’s report still holds partly concealed, and the hidden part shows the helplessness of democratic countries that there’s need to integrate opinions from Congress, academies and interest groups. As for Beijing, there are fewer scruples especially when the NetsUnion Clearing Corporation became the the operator of China’s nationwide centralised platform for the processing of online transactions undertaken by the country’s third party payments providers.(including Alipay and Wechat) in 2018. Even, China had filed 84 patents for DCEP in Feb. 2020, developed dual offline payment and classified DCEP wallet into four categories according to payment limit and balance limit. It’s convenient for anonymous users (small-sum transaction) to transfer funds while real-name verification is required for those large-sum transactions that could help combat money laundering. The comprehensive consideration shows that it was an detailed-planned program that makes the Fed’s one look awkward.
Among the sub-projects of China’s DCEP, the most impressive design must be the CIPS (the Cross-Border Interbank Payment System) launched in 2015 and the CCFIS (Cross-border Financial Information Services), a joint venture with foreign investors, founded in 2021. In the future, with DCEP as a legal tender, CIPS can directly adopt it for cross-border payment, which can help get rid of the influence of US dollar on RMB and help form an environment in which international trade is settled and delivered in RMB. At that time, if someone calls out financial decoupling during a trade war, will the host and the guest exchange position with the advent of DCEP and the intervention of the cross-border payment system? The chairs of the two central banks should know the answer better than you and me.
As a small country and population, maybe we don’t need too much strategic consideration. I had called on the central bank to study software-based money in 2006 (and more than eight articles there after) but from the cold responses I received, it seemed that friends of central bank just thought it a fantasy. Twelve years later in Feb. 2018, Governor Yang took office. After overall consideration, Yang readily accepted advice and set up the CBDC research group. There was detailed and description different from the past in the reference materials of the board of directors of Central Bank (part 7) released on Jun. 17th 2021. On Jun. 30th, we Appacus Foundation published an article titled The Historical Positioning of Governor Yang, saying that the design of Taiwan’s CBDC need not to completely replace cash, but can instead serve as a backup for private payment system. There can be limit amount each customer could hold and even “managed anonymity” design that can help make a balance between laws and financial market stability. Of course, it will also increase the convenience of people's lives. Now that the US and China had released their plans, if we don’t fear of being deemed as imitating and copying others, why not give it a try?
According to BIS and IMF reports, 85% of the world’s central banks are doing research on CBDC. At the end of January, Fortune magazine even pointed out that nine countries around the world have adopted digital currency. Seven of them are small, but China and Nigeria have populations of more than 1.6 billion. We shouldn’t underestimate it! Taiwan has already lagged behind in terms of CDBC research. If copying US or China seems a dilemma, maybe we can start our own one and the conservative stablecoin pattern might be a preferrable choice. The central bank can take the lead and integrate financial institutions, e-payment companies, and e-ticket companies. Issue the CBDC highly backed by reserve assets and the problem gets relatively simple. On one hand, it can help integrate private industries and thus prevent multifarious payment apps. On the other hand, if we use the technique to issue commemorative coins in the future, we can win the reputation as the world’s first central bank NFT. It’s one endorsed by central bank and more unique than ordinary NFTs. Don’t you think it a nice and feasible fantasy?
All countries may feel pressured to make a decision in 2022 concerning CBDC. Western countries may feel unsure whether to adopt China’s mode as adopting it feels like eating “chicken ribs.” China, although been working on it for several years, can’t take the credit domestically and still have to face doubts externally, making the fruit of success taste less delicious. There are also many western countries missing the opportunities like Taiwan. Why not adept to current situation, turn chicken ribs into delicacy and enjoy it?
(Released on United Daily News, Feb. 7th, 2022)