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Wang Yongli, former vice president of the Bank of China: How do you view the US OCC relaxing the use of stablecoins?

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Learn about the impact of the new policy on stablecoins in the United States.

Original title: "Wang Yongli | How to view the US OCC to relax the use of stablecoins"

Original source: Wang Yongli

On January 4, the U.S. Office of the Comptroller of the Currency (OCC) issued an explanation letter stating that the National Bank of the United States and the Federal Savings Association can become the operating nodes of the blockchain stable currency and use the associated stable currency for "Permissioned payment activities" believes that the blockchain stable currency network can be used as a "cheaper, faster and more efficient" payment method to reduce the cost of cross-border transactions, so banks are authorized to use the blockchain and its stable currency during remittances. If the bank chooses, it can also issue its own stable currency (for example, JPMorgan Chase Bank proposed to launch its own US dollar stable currency JPMcoin, etc.).

Some people think that this is a huge victory for the encryption industry and the public chain. Banks can regard the public chain as similar to SWIFT , Fedwire-like financial infrastructure, regard stable currency (such as USDC, etc.) as a new electronic store of value, and help the United States take a leading position in embracing public chains and stable currency, and promote the dollar-based digital stable currency to become a payment settlement mainstream media, further enhancing the influence of the US dollar on a global scale. 2021 will be a critical year for public chains and stablecoins to enter the mass market. The door to a new era is quietly opening, and the game has begun.

So, how should the OCC move be viewed?

First of all, the OCC statement refers to the stable currency , not an arbitrary stablecoin, but a stablecoin that has been reviewed and approved by the regulatory authorities and accepted its continuous supervision. At present, such stable coins mainly include USDC, GUSD, PAX, etc. Stablecoins that have not been reviewed by the regulatory authorities, such as USDT, have not yet passed the review of the regulatory authorities, so they are not included in this scope. More importantly, the stablecoins referred to by the OCC refer to stablecoins that are simply pegged to the equivalent of the U.S. dollar (actually the "network token" of the U.S. dollar), rather than stablecoins that are pegged to the equivalent of other national currencies. Nor is it a supra-sovereign stablecoin that is structurally pegged to a basket of currencies that includes the U.S. dollar (although the U.S. dollar may have the largest currency basket coefficient, it is still different from the U.S. dollar). At the same time, this does not include virtual cryptocurrencies that are completely endogenous to the network (requires "mining"), such as Bitcoin, Ethereum, etc., because this has no connection with the US dollar and will not help strengthen the international status of the US dollar. push action.

Therefore, the public blockchain mentioned by OCC is not a decentralized, The non-licensed open source blockchain is a permissioned chain, requiring participants to comply with all legal regulations, including applicable user real-name, anti-money laundering, anti-terrorist transmission, and consumer protection laws and regulations. The OCC’s statement does not represent a victory for permissionless public chains.

Secondly, this move by the OCC, on the one hand, reflects the support of the U.S. regulators for the innovative exploration of blockchain and stablecoins. Strive to seize the leading position in blockchain and stablecoin payment and settlement, and enhance the international influence of the US dollar. At the same time, it also shows that it must incorporate stablecoins into strict supervision. Monetary and financial innovation must be carried out under the premise of macro-prudential supervision and compliance with laws and regulations.

Once again, this move by the OCC is implemented in the United States There is no problem, but if we want to promote the US dollar stable currency for cross-border payment settlement, in fact, we need the international community to reach a consensus and form international rules that we must abide by. Otherwise, even if the U.S. dollar is allowed to be freely exchanged with stablecoins in the United States, it does not mean that other countries also allow such stablecoins to be freely exchanged with their own currencies, which will inevitably cause many problems. At the same time, the United States can launch a USD stablecoin operating system, and other countries can also launch different operating systems such as the Euro stablecoin, RMB stablecoin, and Japanese Yen stablecoin, which may form a situation of mutual competition. The international influence of the currency still depends on the comprehensive national strength and international influence of the currency issuing country. Of course, it will also be affected by the efficiency and security of different stablecoin operating systems. From the perspective of maximizing the overall interests of the world, the coexistence of multiple cross-border payment and settlement systems inevitably entails huge investment and system operation and maintenance costs, which is not a reasonable choice. This cross-border payment and settlement system is actually a kind of financial infrastructure. In terms of system operation and management rules, the more centralized and unified the better.

An important revelation to note:

Currency It needs to be grasped separately from the form and operation mode of currency.

With the birth and continuous development of Bitcoin, the concept of "digital currency" continues to heat up. The decentralized digital encrypted currency, the network stable currency linked to the equivalent value of a single legal currency, the super-sovereign network stable currency linked to a package of legal currency structurally, and the central bank digital currency that digitizes the legal currency are constantly emerging, triggering worldwide discussions. There are fierce debates on the nature of currency, currency origin, currency function, currency performance and operation, monetary policy and currency control.

But in fact, these debates have largely blurred the difference between money and the form and operation of money, and will It's lumped together.

Currency is actually produced and developed to meet the needs of social wealth exchange transactions, and it plays a role of value scale and The core function of a medium of exchange. Its development has experienced natural physical currency (items most sought after by social groups, such as special shells, bones, feathers, etc.), standardized metal currency (gold coins, copper coins, silver coins, etc. manufactured according to certain regulations), and metal standard banknotes (tokens such as metal currency daily circulation), and the development stage of pure credit currency that is separated from physical objects.

Now, the currencies of all countries in the world have entered the stage of credit currency, realizing the history of currency from physical currency to credit currency sexual leap. Then, why must currency be transformed from physical currency into credit currency, and whose credit is the "credit" of credit currency?

This is because, with the development of economy and society, people realize that currency is becoming more and more important, but often because Serious problems arise from excessive money supply or insufficient supply. How to maintain the basic stability of the currency value and give full play to the role of money as a value measure and a medium of exchange has become an important economic and social problem that must be solved.

After the practice of banknote circulation under the metal standard system, people gradually discovered that it is not necessary to choose special physical objects in society It can be used as a pure value unit or value symbol, and theoretically speaking, to maintain the basic stability of the currency value, it is necessary to ensure that the total amount of currency in a country can be compared with the legal protection within the country's sovereignty. The total scale of trading wealth corresponds to and changes with the scale of social wealth, which is adjustable. As a result, natural objects such as gold and silver that have been used as currency must withdraw from the currency arena and return to the source of their social wealth, and their value also needs to be marked (price) with a new currency. Currency must be separated from social wealth and become a symbol and counterpart of pure wealth value. Currency itself may no longer have physical value, but the reason why it can be accepted by society is that the total amount of money is based on Based on the value of all tradable wealth in a country, it is protected by national sovereignty and laws, and supported by national credit. Therefore, this non-physical currency is called credit currency, also known as sovereign currency or legal tender.

Thus, If a currency does not get sovereignty Corresponding to the wealth protected by law, it is difficult to guarantee the stability of its currency value, and it is difficult to become a real credit currency. Under the circumstances that national sovereignty still exists and the world has not yet achieved integrated governance, it is a way to reuse gold or any other physical object as currency, or to create a decentralized cryptocurrency with a strictly locked total and staged supply based on the principle of gold. It is impossible to succeed if the currency goes backwards.

However, even credit currency, with the development of science and technology, its manifestation and operation mode It is also constantly changing, from cash currency (expressed in the form of physical banknotes and coins, and its operation mode is expressed as direct cash receipt and payment), to deposit currency (expressed in the form of bank deposits, and its operation mode is expressed as depositing and withdrawing cash through deposit certificates) or bank paper-based transfer settlement), electronic currency (expressed in the form of payment institution deposits, and its operation mode is represented by electronic carriers and informationized accounting and settlement), digital currency (expressed in a more digital form, and operated in a more networked and intelligent way) etc. It can be seen that the essence of currency will not change, but its morphological operation method may not change, so as to promote its continuous improvement of operating efficiency, reduction of operating costs, strict compliance and risk control, and maintenance of monetary and financial stability.

Based on the above judgment, it is clear:

Bitcoin, a type of network-generated encrypted digital currency, violates the logic of currency development, and cannot become a real currency in circulation, but can only become a new type of asset (virtual asset), which can be used for investment speculation, but its price may

A super-sovereign stablecoin structurally linked to a basket of fiat currencies sounds very It is beautiful, but it is difficult to implement it when the world has not yet implemented integrated governance. It is basically a fantasy;

With a single legal currency The equivalent-pegged network stable currency is actually a new type of token, as long as it can meet the regulatory requirements, it can exist completely, but it cannot subvert or replace the legal currency, but can only change the form and operation of the currency ;

De-cash digitization of legal tender is still an inevitable trend, but its realization path may be centralized or decentralized different options. In fact, under the unified supervision of the central bank and regulatory authorities, the network stable currency independently promoted by different social organizations and linked to the equivalent value of a single legal currency is a manifestation of the digital decentralization model of legal currency. Judging from the statement of the OCC, the United States may give priority to the decentralization model and may promote the international application of its digital currency through its world network of global business organizations. The other is to directly launch the central bank’s digital currency operating system led by the central bank. For example, the central bank of China promotes the development and operation of digital renminbi, which is the manifestation of the digital centralization model of legal tender. The centralized model may reduce social duplication of investment, and concentrate efforts to improve the efficiency of development and promotion.

Of course, the digitization of legal tender is easy to realize in China, but the digital currency operating system should be applied to cross-border payment settlement , requires the coordination and cooperation of countries and international organizations, not wishful thinking, even for the US dollar digital stable currency.