Full text of Yao Qian's speech: Digital assets call for digital currency
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, Author Yao Qian, reproduced by Odaily with authorization.
2019 is the tenth year since the blockchain was born. In the past ten years, the blockchain has only been able to realize the transfer payment of Bitcoin at the beginning, and has developed to be able to combine with smart contracts to develop third-party blockchain applications, and now to cross-chain, side-chain, sub-chain and other technologies. Flourish. How will blockchain technology develop in the next decade?
On September 17, the 5th Blockchain Global Summit "Blockchain New Economy · New Decade and New Beginning" hosted by Wanxiang Blockchain Lab officially opened in Shanghai.
This year's special guests include Xiao Feng, vice chairman and executive director of Wanxiang Holdings, founder of Wanxiang Blockchain Laboratory, Li Lihui, former president of Bank of China and leader of the Blockchain Research Working Group of China Internet Finance Association, China Securities Co., Ltd. Yao Qian, deputy secretary of the party committee and general manager of the registration and settlement company, Nobu Kishi, counselor of the Payment and Settlement System Bureau of the Bank of Japan, Ma Zhitao, vice president and chief information officer of WeBank, etc.
In the keynote speech in the morning session, Yao Qian, deputy secretary of the party committee and general manager of China Securities Depository and Clearing Corporation, delivered a thesis speech entitled "Digital Assets and Digital Finance".
The wonderful views are as follows:
The digitization of assets will give birth to a financial retail revolution and will bring about more far-reaching financial changes.
Any financial instrument, such as currency, securities, etc., is a "veil" covering the underlying assets.
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The full text of the speech is as follows (confirmed by Yao Qian):
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The topic I want to talk about today is "Digital Assets and Digital Finance". I personally think that digital assets and digital currency are the two most important aspects of the digital economy. The development of digital assets can not only effectively expand the application scenarios of digital currency, but also lay an important cornerstone for the issuance of digital currency in the future. The coordinated development of the two is the basic driving force and important symbol of the development of digital economy.
When it comes to the digital economy, one cannot fail to mention the important instructions of General Secretary Xi Jinping. He pointed out that China attaches great importance to innovation-driven development, firmly implements the new development concept, accelerates digital industrialization and industrial digitization, and strives to promote high-quality development and create high-quality life. The digital economy has become a key driving force for my country's economic and social development. General Secretary Xi's speech was high-level and rich in content. If the digital economy is the body, digital finance is the blood, and digital assets are the core. Digital financial innovation characterized by asset digitization is a brand-new system that may reconstruct traditional financial operation methods, service models and even the entire ecology.
What exactly is digital finance, or what is new about new finance? In my opinion, digital assets are the core proposition of digital finance. Only when digital assets are alive can digital finance be fully alive, so asset digitization is the foundation of digital finance. Through digitalization, asset attributes have become diversified: it can be securities or currency, it can be spot or futures... These names are "talismans" for assets to circulate in traditional financial services. Only under the definition of digital assets can assets flow; and under the new financial model of digital assets, the boundaries are blurred.
Because the digitalization of assets has opened up the "two veins of Ren and Du" in the financial market, any asset has become digital in form, has divisibility and liquidity, and can be standardized without relying on traditional external forces to activate and Empowerment (people call it "touching stones into gold"). After breaking the reliance on labels such as currencies, securities, and futures, the flow of digital assets will become more flexible and autonomous. Recently, the U.S. Securities Regulatory Commission (SEC) approved BlockStack and other projects, so that everyone can see this: without the participation of financial intermediaries in the traditional sense, financing activities can still be carried out, and the digitization of assets makes financing costs lower. It can be wider and more efficient... This has opened up a new situation in the financial system, and financial innovation centered on digital assets may be an important development direction of digital finance.
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1. Multiple attributes of assets, integration and innovation
There is a famous saying in economics: Money is a veil covering the real economy. Applying this sentence, we can say that any financial instrument, such as currency, securities, etc., is a veil covering the underlying assets. Taking securities as an example, it is itself a symbolic representation artificially created to allow the underlying assets to flow.
Stocks are the securitization of shareholders' equity, bonds are the securitization of claims, electronic gold is the securitization of gold, mortgage-backed securities (MBS) are the securitization of bank credit...the significance of securities is to create liquidity for assets However, with the digitalization of assets, the meaning of traditional securities may have new changes. Because after the digitization of assets, there will be liquidity naturally, and there will be no need for a layer of securities, and there will be no so-called identification of securities attributes, and the corresponding regulatory system will also be eliminated.
The reason why ICO is very controversial, in addition to being used as a fraud tool, is that the public offering, circulation and trading of digital equity are different from traditional stock concepts and models, making traditional securities concepts and based on this The entire financial system and regulatory rules of China have become ambiguous.
In the face of the new type of unconventional digital assets, the current response of the regulatory authorities of various countries is to either deny its emergence, or to try to put the veil of securities back on the new type of digital assets, just like the SEC. In its public statement in November 2018, the SEC mentioned an interesting title called Digital Asset Security (Digital Asset Security). In a sense, Security (securities) seems redundant, and the SEC’s intention to add Security (securities) after Digital Asset (digital assets) is more to express its policy stance.
Because it records only part of the information as a circulation tool, and does not record information related to the real trade background such as contracts, logistics, invoices, taxation, and factoring. Digital assets in the true sense should be original, contain full amount of information, and be displayed and circulated in digital form. Assets such as digitalized order contracts, logistics documents, invoices, and factoring contracts are the real digital assets.
These digital assets are like securities, which can be circulated and traded, but it is difficult for them to be classified as securities according to the traditional classification of securities. Just as the emergence of digital currency blurs the currency levels such as M0, M1, and M2, digital assets blur the attributes of securities. In other words, their attributes have become more connotative. They can be registered as tradable products in the interbank market, registered as tradable securities products in the securities market, and even used as payment tools on the basis of clarifying legal relationships. The attributes of such digital assets are vague and diverse. Conversely, this is what makes it special: it can be used as a security or a quasi-currency... The deep integration of various attributes is conducive to innovation.
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2. Asset digitization, driven by technology
The digitization of assets is inseparable from the use of financial technology. Nicklaus Wirth, the winner of the Turing Award and the father of Pascal, once proposed a famous formula: "program = algorithm + data structure". This formula profoundly reveals the essential characteristics of the program. If it is extended to a wider range of business processes, the formula can be amended to "financial technology = algorithm + data". Regulatory technology, big data credit investigation, robo-advisory, digital currency, etc. are all in essence the embodiment of "algorithm + data" after the computing power breaks through the singularity, but the emphasis is different. Therefore, some people highly admire algorithms, and believe that building algorithms to imitate, surpass and eventually replace humans is the most important ability in the 21st century, and the future belongs to algorithms and their creators.
Asset digitization is a model of integrated application of algorithms and data. Ensuring the credibility of original data through technical means is the fundamental requirement of asset digitization. The circulation of digital assets also requires the support of various technologies to ensure its safety, efficiency, collaboration, control etc.
Traditional financial services are carried out around the accounts of commercial banks. In the era of digital finance, the public-private key system has upgraded the account system of commercial banks. This is a very significant change in the history of finance. It is equivalent to A whole new field has been created, and its safe operation is supported by a whole set of complex trusted technologies and cryptography schemes. The generation, circulation, and confirmation of digital assets all rely on brand-new value exchange technology. The digital form of assets can be a string of binary encrypted information, or expressed in the form of centralized or distributed ledgers. In the future, it can also be expressed in the form of qubits. Quantum information stored in the form of In terms of value transfer, both Token mode and Account mode can be adopted, and various modes can be converted into each other.
Here we focus on blockchain technology. Since the development of the Internet, it has initially completed its phased mission: connecting people and information. At present, even high-consumption and low-efficiency scenarios such as personal live broadcasts can be fully supported, which is enough to illustrate the huge energy of the Internet. However, due to the characteristics of easy deletion, modification, and duplication of electronic data, existing network security technologies are difficult to guarantee the efficient, safe, extensive and orderly circulation of high-value data on the Internet. Therefore, the value exchange on the Internet still depends on the financial private network to complete the final value transfer. In addition, due to data property rights, data is still bounded by countries or institutions, forming isolated islands, and it is difficult to form synergies between data.
As a trust machine, blockchain technology has created a new paradigm that connects all parties involved in financial services, can break data islands, improve data security, reduce transaction costs, and enhance risk control capabilities. Why technology is getting so much attention. It can be said that the blockchain carries too many ideals and has won the enthusiasm of capital and industry.
All kinds of compliments conceal the embarrassment that this technology has few major applications outside of Bitcoin and Ethereum. In such an atmosphere, researchers and technicians should calm down, carefully analyze and explore the shortcomings of improving blockchain technology, such as how to meet the needs of high-concurrency scenarios, how to interact with other non-blockchain systems, How to solve the problem of data privacy on the blockchain, how to combine smart contracts with existing regulations, how to design a governance mechanism suitable for the blockchain, the formulation of standards...etc.
China is a big country on the Internet, and of course it is also a big country in data, but this is more in terms of quantity than quality. How to improve quality based on quantitative advantages, transform data resources into valuable assets, generate credit from them and serve the real economy, and ultimately promote social and economic development are undoubtedly problems and challenges in the field of financial technology in my country.
In The Secret of Capital, Hernando de Soto describes the creation of capital in this way: "Formal systems of ownership provide the processes, forms and laws that allow us to embody assets as active capital …assets are processed into capital by carefully describing their most economically and socially useful aspects, having them identified in a system of record, and then organizing them most productively and recording them in in the certificate of title."
As a credible technology, blockchain is recognized and endorsed by many parties. It is the technological prototype of a new generation of financial infrastructure. It can "buff up" credit for underlying entities that existing financial institutions have not touched, enhance mutual cooperation, and reduce transaction costs. This may create a new situation for small and medium-sized enterprises and marginalized groups whose credit and loan resources have not been well penetrated, and this has extraordinary significance for the country's economic development and financial supervision.
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3. Assets come from finance, inclusive sharing
The production and circulation of digital assets are very different from the existing financial system. The deeper meaning of asset digitization is that data information is original, can be penetrated and traced, and can be self-certified and other-certified, which leads to the concept of self-finance. There are three typical characteristics of self-finance: first, users independently control digital identities; second, users independently control digital assets and assume transaction responsibilities; third, peer-to-peer transactions between users can be independent of third-party intermediaries.
Digital finance can be self-disciplined or heterogeneous. It is a financial technology system with a high degree of personal privacy protection built on the basis of full disclosure of underlying information. While producing data, users are also creating digital assets, adding various elements to innovative digital financial services.
Digital assets endow traditional assets with a high degree of autonomous liquidity, which greatly improves the efficiency and authenticity of supply chain financial services, and establishes a dynamic, complete, authentic, and credible information disclosure mechanism for investors, fundamentally solving the problem at the bottom of small and medium-sized enterprises. The problem of information penetration in the multi-level circulation of assets allows small and medium-sized enterprises to obtain an equal right to speak, without relying on the credit of core enterprises, and independently carry out financing activities. At the same time, financial institutions can obtain financing directly through credible DLT ledgers without relying on core enterprises Required SME underlying asset information.
This is the practical value and significance of the digitalization of assets and the new model of self-finance. It makes the disadvantaged groups in traditional finance no longer vulnerable, financing is no longer difficult and expensive, and finance will become closer to entities and more inclusive and shared. With the support of modern technology, its security and regulatory convenience are not the same as those of traditional financial assets, and it can flexibly make up for the gaps in existing financial services.
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4. Financial Integration, Freedom and Openness
Digital finance may restructure financial operation methods, service models and even the entire ecosystem. It is concise and clear, transcends time, space and physical boundaries, breaks national boundaries, is free and open, and respects the autonomy and voluntariness of market participants. Driven by technology, it does not rely on traditional financial intermediaries to allow assets to circulate while retaining the original full amount of information.
Non-standardized assets that were previously "quiet" on a large scale outside the market, such as warehouse receipts, intellectual property rights, contracts and other assets, will radiate a new financial "vitality" and circulate at low cost and high efficiency. The economic prospects and significance are immeasurable . What is even more revolutionary is that the digitalization of assets will give birth to a financial retail revolution, just as the emergence of the Internet has given birth to retail giants such as Ali, the awakening of the retail financial market will bring about more far-reaching financial changes.
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5. New form of currency, independent control
Digital assets call for digital currency! Both the private and public sectors are working on this.
Virtual currencies are correcting the fundamental flaw of lack of value support. From the lack of basic asset support of Bitcoin, to the exploration of various stable tokens, or based on legal currency mortgages, or based on algorithms, and then to the intervention of regulatory authorities, the stable tokens based on legal currency mortgages have increased due to their value anchoring to legal currencies. Letter, and the recent emergence of JPM Coin and Facebook Libra, the problems of unstable and non-compliant virtual currency values are expected to be resolved. On the surface, the value of virtual currency is anchoring the central bank currency, but it is actually "devirtualization".
Therefore, the concept of cryptocurrency and virtual currency needs to be re-examined. Cryptocurrency is no longer necessarily a virtual currency. The dirty water must be poured out and the child should be picked up. In a sense, it is of great significance to distinguish between cryptocurrency and virtual currency.
Cryptocurrency has the potential to become a currency in the true sense, but at the currency level, it is not necessarily a digital M0, but may also be a higher-level currency than bank deposit currency: Mn. Compared with the digital M0, the digitalization of high-level currencies such as M1, M2...Mn may have more room for imagination.
Central banks have always been considered unsuitable for the role of digital currency supply. In addition to the concerns of narrow banking, the main concern is that when digital currency is issued to the C-end (retail clients, that is, the public), the central bank may face great service pressure and costs. This is one of the difficulties that countries face in the process of developing legal digital currencies. At present, central bank digital currency experiments in various countries, such as the Jasper project of the Bank of Canada, the Ubin project of the Monetary Authority of Singapore, the European Central Bank and the Stella project of the Central Bank of Japan, etc., are experimenting with encryption technology, but they are still in the B-side (institutional) application scenarios .
Technically, 100% reserve deposit means that the entire life cycle of digital currency, such as issuance, circulation, recovery, and destruction, must be attached to the traditional account system, especially the circulation of inter-agency central bank digital currency. In addition to the central bank digital currency book update , but also to deal with the clearing and settlement between the corresponding reserve accounts, which not only increases the pressure and complexity of the central bank's central system, but also makes it difficult to achieve the requirement of "loose coupling of accounts". Since financial innovation is not easy to develop, the imagination of cross-border payment The space is also greatly reduced. In comparison, the central bank cryptocurrency (Central Bank Crypto-Currencie, CBCC) allows customers to truly manage their own currency instead of entrusting it to a third party, giving customers the ability to control themselves, and it can also bypass Swift and open up a new cross-border payment The battlefield, at present, should be the hottest frontier focus.
Bank of England Governor Carney believes that a digital currency like Libra will be a better choice for the global reserve currency. My understanding is that digital currency is not just the digitization of legal currency, just like digital assets are not just as simple as asset digitization, the future digital currency needs to repair the shortcomings of the existing currency system, surpass the US dollar, and upgrade.
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6. Responding to new ideas and supervising technology
The various characteristics of the above-mentioned digital assets, whether they are diverse attributes, integrated innovation, technology-driven, free and open, all pose new propositions and challenges to financial supervision. Traditionally, the regulatory paradigm with license management as the key, financial institutions as the starting point, and accounts opened with financial institutions as the core needs to be re-examined.
First, license management for institutional access should be transformed into authority management for user access.
In the self-finance mode, user entry must be authenticated and verified by relevant certification agencies, the business process must be isolated from identity authentication, and cryptographic primitives and solutions are used to protect transaction identity and content privacy, and the management department has the right to Carry out penetrating supervision. On this basis, the regulatory authorities of various countries collect their own residents based on the digital identity of customers and delimit digital jurisdictions. In digital jurisdictions, the regulatory authorities of various countries set up various business participation permissions for domestic resident nodes in accordance with KYC, AML/ATF and other financial regulatory policies.
The financial business and capital transactions between domestic residents and non-residents are regulated by the regulatory authorities of each country in accordance with their respective capital account opening and transnational financial supervision policies. This design not only guarantees the freedom and openness of self-financing business, but also fully meets the regulatory requirements of various countries. Take Calibra, Facebook's regulated financial subsidiary, as an example. Its first product is the Libra digital wallet. Facebook uses the Calibra wallet to connect the social user's identity information with the Libra user's blockchain address. The wallet replaces the licensed financial institution as a digital wallet. Since the subject is regulated in the financial environment, the regulatory strategy can be implemented in accordance with the specific requirements of the jurisdiction, taking into account the requirements of user privacy protection and regulatory compliance.
The second is business approval, and smart contract review should be added.
In the self-finance mode, traditional financial services will be logically coded into smart contracts that are transparent, credible, automatically executed, and enforced. Smart contracts carry various financial services, and even a smart contract represents a financial business. In a sense, controlling the smart contract will control the future self-finance business. On the basis of safe and efficient user identity authentication and rights management, the smart contract must be verified by the relevant department before being uploaded to the chain to determine whether the program can operate in accordance with the policy expectations of the regulatory department. If necessary, the regulatory department can prevent non-compliance. On the blockchain of the regulated smart contract or close the authority of the residents of the country to execute the smart contract, at the same time, a regulatory intervention mechanism that allows the code to be suspended or terminated can also be established. In addition, the parameter setting of smart contracts is also a means of supervision. Just like using regulatory indicators such as statutory reserve ratios and capital adequacy ratios to prevent and control bank risks, regulatory authorities can also adjust or intervene in smart contract parameters to control self-financing. Business size and risk.
That's all for my speech, thank you all!
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