Macro-Finance Salon (No. 73) and Fintech Open Classes (No. 10): The Essence of Currency and Virtual Currency

On November 12, the Macro-Finance Salon (No. 73) and Fintech Open Classes (No. 10) was held at Renmin University of China. It was hosted by the IMI and the Global People magazine of People’s Daily and supported by Zhejiang University Academy of Internet Finance and the Global Fintech Lab. The guest speaker, Mr. Wang Yongli, the former vice president of Bank of China and Academic Committee member of IMI, addressed a keynote speech on “the Essence of Currency and Virtual Currency”, and Mr. Song Ke, deputy director of IMI, chaired the lecture. Mr. Wang first talked about the issue of currency’s essence. He believed that currencies, as a standard of deferred payment, measure and store of value, must be valuable in themselves or supported by value. The liquidation of the currency has developed from direct cash settlement in the past to the current system dominated by accounts clearing. Non-cash is an inevitable trend. He pointed out, the distribution of legal currencies mainly includes ways of two levels: First, the central bank purchasing currency reserves; second, the credit of money. Since credit delivery is based on basic currencies, which were supported by value, the currency is still valuable. Next, Mr. Wang analyzed Bitcoin and claimed that it couldn’t become a real currency. Bitcoin is a digital symbol in an artificially designed network environment, without use value and value. Limited amount of Bitcoin can’t meet the needs of social development. Open source system is more likely to cause the overflow of digital currency. For Bitcoin, it keeps complete secret of the offline party, which makes it difficult to meet the needs of legal supervision. Meanwhile, a country’s core interest lies in the issuance and regulation of currency and it is difficult for Bitcoin to become a super-sovereignty currency. He thought that Bitcoin belongs to the virtual currency or the network business currency and the supervision for Bitcoin should focus on exchange and transaction. Finally, Mr. Wang talked about the digital currency issue of the central bank and believed that the central bank’s digital currency should only be the digitalized and intelligentized legal currency, and it should be the settlement coin or business currency on a network platform leaded by the central bank. Whether a country’s central bank digital currency can become the central currency of the online world depends on the overall national strength and international influence of one country, including its influence of cyberspace. China’s central bank has the foundation to build the world’s strongest digital coin and we should actively promote it. In the Q&A session, Mr. Wang answered the questions about the development of central bank’s digital currency, decentralization of Bitcoin and so on.

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