The logical relationship between the internationalization of RMB, the central bank's digital currency and overseas venture capital consumption
Monetary policy and financial system are the major issues of a country. Since the central government has repeatedly emphasized the importance of "RMB internationalization", and now clearly instructs Shenzhen to be the first demonstration zone of "RMB internationalization" and "digital currency", we can't understand for the time being that the level is not enough , Learn more, talk more, think more, write more, even if the level is not enough to be criticized by others after writing, it is progress, and the more you understand later.
Let’s talk about RMB internationalization first, then digital currency, and finally sort out the logic of the substantial increase in the valuation of overseas entrepreneurial projects after the introduction of the policy, as well as new opportunities for overseas entrepreneurial ventures in the future.
RMB internationalization refers to the process in which RMB can cross national borders and circulate abroad, becoming an internationally recognized currency for pricing, settlement and reserve. Although the current overseas circulation of the RMB does not mean that the RMB has been internationalized, the expansion of the overseas circulation of the RMB will eventually lead to the internationalization of the RMB and make it a world currency.
The meaning of RMB internationalization includes three aspects: first, RMB cash enjoys a certain degree of circulation abroad; second, transactions settled in RMB in international trade must reach a certain proportion; third, and most importantly, Financial products denominated in RMB have become the investment tools of major international financial institutions including the central bank, and the scale of the financial market denominated in RMB has continued to expand.
This is a common standard for measuring the internationalization of currencies, including the RMB. The highest form of economic competition between countries is currency competition. If the substitution of RMB for other currencies increases, it will not only change the distribution pattern of reserve currency and its related seigniorage benefits, but also have a profound impact on the global geopolitical structure.
However, the first step in these three aspects is very difficult. At present, the circulation of RMB cash abroad is very low, far less than that of the US dollar. The second step is also not easy. Without the first two steps, the third step is out of the question.
Without the central bank's digital currency DCEP, the internationalization of the renminbi is basically useless.
You can feel it when you travel abroad. Generally speaking, before going abroad, you will exchange a little bit of US dollars and the local currency, and spend the local currency first. If you spend it directly in US dollars, the other party will generally accept it, but you have to give the other party RMB. The other party may not be happy.
why?
There are many reasons, one of which is that the other party has no place to spend after receiving the RMB cash, and cannot buy things with RMB cash; the second is that there is no place to deposit it, and the local banks may not have RMB exchange or deposit business at all.
The central bank's digital currency, or digital renminbi, will greatly improve this situation after it is released.
Everyone pay attention to the speeches and articles of Mu Changchun, director of the Digital Currency Research Institute of the People's Bank of China, in public.
The key content, I copy and paste the original text here.
When I took this course, it was August 2019, and it was not too far away from the launch of our own digital currency by the People's Bank of China. Our digital currency project is called DCEP (Digital Currency Electronic Payment), which is digital currency and electronic payment tool.
……
What does the central bank's digital currency look like?
Its functions and properties are exactly the same as banknotes, except that its form is digital. Our definition of it translates to "digital payment tools with value characteristics".
What does it mean to have "value characteristics"? Simply put, it means "value transfer without an account". You can understand it when you think about paper money. When you pay with banknotes, you don't need an account, and the same is true for DCEP.
You can imagine such a scenario: as long as you and I have DCEP digital wallets on our mobile phones, we don’t even need the Internet. As long as the mobile phone has power, the two mobile phones can touch the digital currency in one’s digital wallet. Transfer to another person.
In other words, when you pay, you don't need to bind any bank account. Unlike we now use WeChat or Alipay, we need to bind a bank card, but DCEP does not need it.
Of course, unless you want to add money to the digital wallet, or you want to withdraw money from the digital wallet for financial management, other than that, mutual transfers between users do not require account binding.
This means that DCEP can circulate like banknotes. This is why, you can simply understand it as a digital alternative to paper money.
I don’t know how the readers feel. Anyway, Uncle Cat was shocked when he saw this paragraph. The central bank friends are too aggressive, and DCEP is too ambitious. This is to use the "world RMB" to kill " Dollar hegemony" style of play! ! !
What's the meaning?
Still take traveling abroad as an example, as long as the other party also has a mobile phone and installs an APP that supports China’s DCEP wallet standard, when Uncle Mao travels abroad to buy things, he can directly transfer the money in Uncle Mao’s mobile phone according to the exchange rate between the local currency and RMB. The digital renminbi is transferred to the other party's mobile phone, and even the mobile phones of both parties do not need to be connected to the Internet! ! !
Do you feel a little interesting? This is more convenient than Alipay and WeChat payment! ! !
After the other party receives the digital renminbi, how do they spend it?
This is simple. If there are "Taobao", "Jingdong" or local e-commerce platforms in the local area that are willing to accept digital RMB shopping, it will be no different from the shopping experience of Chinese people today with their mobile wallets.
In addition to "Taobao" and "Jingdong", local versions of "Didi Kuaidi", "Meituan Dianping", "OFO Mobike", and "Douyin Kuaishou" can all emerge.
Surprise or not? Accident or not?
If you don’t want to spend it, just open an exchange app on your mobile phone, and you can exchange digital renminbi into local currency with a flick of your finger. I don’t need to say more about the subsequent process, right?
You can deposit it directly, and you can deposit it in any mobile bank in the world that supports DCEP digital renminbi, and you can deposit it wherever the security is good and the interest is high.
Note that in the entire overseas closed-loop process of digital renminbi, there is no technical need for the intervention of local banks (policy and regulation issues will be discussed later). In fact, the overseas circulation of RMB banknotes does not require the intervention of local banks, as long as the recipient is willing to accept it.
As long as the recipient can spend or exchange the received digital renminbi into other currencies, of course they are willing to make an extra transaction, and no one will make life difficult for the money, right?
What's more, in order to promote the digital renminbi, the Chinese side is likely to resort to the big killer of "burning subsidies".
Chinese investors and ordinary people should still remember the "cash-burning subsidy war" of "Didi Kuaidi", "Meituan Dianping", and "OFO Mobike" back then, right?
Ali Tencent, the behind-the-scenes funder of these money-burning companies, mainly appeals to cultivate usage habits for their own "Alipay" and "WeChat Pay". ! !
This is just a money-burning behavior of the two companies, in order to seize the opportunity and share in the mobile payment war.
What if it rises to the level of national strategy? If someone tells the leader of the country that he only needs to burn 1 trillion yuan to ensure that the "digital renminbi" can be popularized around the world to destroy the "dollar hegemony", guess he will nod or support it?
I guess he will say, dare to fight, one trillion is not safe, and another one trillion will be added!
Uncle Cat still remembers Chairman Mao's highest instruction, "Nuclear submarines will be produced in 10,000 years!". Uncle Mao’s family members have made their own contributions to China’s first nuclear submarine, the “Long March 1”. This slogan has been standing in the Naval Museum, inspiring generations of builders and defenders.
Today's financial security builders and defenders bear historical responsibilities that are no less important than their predecessors!
Fortunately, after waiting for so long. Our national team, which is the Central Bank’s Digital Currency Research Institute, has been low-key before, but now it is high-profile, of course it is prepared.
Okay, back to the topic of starting a business overseas.
In the digital currency research group, some small partners said that this is a matter of the government/traditional commercial banks or a small number of institutions with resources (such as Alipay and WeChat) in China, and it has little to do with the general public. Ordinary people worry about it. It doesn't have much value; overseas, in the matter of RMB internationalization, the central bank's digital currency can play a limited role, and the role of the central bank can be even more limited (the role of the central bank is to issue DCEP, which is basically a technical activity). The role of the central bank is limited whether it is adopted in specific trade and financial scenarios.
I very much agree with him that the central bank's DCEP is only one of the necessary conditions for the internationalization of the RMB, not a sufficient and necessary condition.
That's why the governor of the central bank will meet with the secretary of Shenzhen to make a statement, so that local governments, state-owned capital, social capital, and entrepreneurs who go overseas will all move.
The internationalization of the digital renminbi, of course, depends on companies and individuals with real users and real businesses abroad, which are divided into two categories: Chinese companies and foreign companies (Uncle Mao uses the native language of the actual controller of the company as the standard to distinguish between Chinese and foreign companies. Enterprises are not classified by the standards that are easy to be manipulated by the place of registration or nationality), we generally call the first force "enterprises going overseas" or "entrepreneurs going overseas".
Entrepreneurs who go abroad usually live longer in China, so they are better able to understand the application scenarios and huge potential of digital currency mobile payment. The story of growing wealth is the object that the central bank's DCEP should unite most from both cognition and practice.
"Entrepreneurs going abroad" raised capital and earned money to go public, which set an example for "foreign entrepreneurs" and boosted their confidence, allowing them to dispel their worries and take the initiative to join the united front of RMB internationalization.
That's why Uncle Mao wrote from the standpoint of "going overseas entrepreneurs" and called for "National Digital Currency Industry Fund" and "Shenzhen Stock Exchange Going to Sea". This is a suggestion from the source of funds and the exit mechanism. Then the government will come forward to convene and participate in the "digital currency" and "RMB internationalization" dialogue research mechanism, so that "entrepreneurs going overseas" can express their demands.
