Although not yet available, Libra, standing on the shoulders of giants in science, technology and finance, has attracted the attention of the global financial community with its ambition and vision for a strong currency.
Libra took the lead. Obviously, this new thing, which has not yet been officially introduced, poses new issues and challenges for foreign exchange research.
At the seminar, Lu Lei, deputy director of the State Administration of Foreign Exchange, Huang Yiping, deputy dean of the National Development Institute of Peking University, Xie Ping, professor of Wudaokou Finance College of Tsinghua University, and Wang Guogang, professor of the School of Finance and Finance of Renmin University, all participated in the discussion. The seminar was co-sponsored by the China Financial Forty Forum and the Foreign Exchange Research Center of the State Administration of Foreign Exchange.
With the deepening of reform and opening up, foreign exchange management has different emphasis in each stage. Zhou Xiaochuan said that globalization has greatly increased the breadth and depth of Chinas economic participation in the global economy. In the current period, foreign exchange studies emphasize the convergence of domestic and foreign currencies. The entry of RMB into the SDR basket of the International Monetary Fund (IMF) marks a significant increase in the free use of RMB. In the future, there will also be a significant increase in the degree of integration of local and foreign currencies, of which encryption currency is more noteworthy.
Speaking about Libra, Zhou Xiaochuan said that at present, Libra has made at least two improvements on the basis of encrypted currency: one is to absorb the lessons of encrypted currency which was eager to achieve in the past, to avoid large fluctuations in currency value and speculative elements; the other is to target cross-border business.
Based on the above, Zhou Xiaochuan believes that Libra has grasped the pain points of high cross-border transaction costs, long time and poor efficiency.
Zhou Xiaochuan said the study found that the existing level of electronic remittance should not lead to inefficient remittance, so the inefficiency is mainly due to policy reasons. Developed countries are concerned about the outflow of funds and whether it will encourage immigration policies; developing countries are generally welcome for the return of funds, but there may be internal foreign exchange controls. No matter the inflow or outflow, there are also relatively large exchange rate risks, as well as anti-money laundering, anti-terrorist financing and other issues.
The emergence of Libra has put forward an idea that has had an impact on traditional cross-border businesses and payment systems. Libra has to focus on a basket of currencies, which is linked to eSDR and dSDR (that is, SDRs innovation based on block chain technology upgraded to digital edition). Zhou Xiaochuan said, In the future, there may be a stronger international currency, which may have a convertibility relationship with the main sovereign currencies, and even become the major circulating currencies in the world.
However, Zhou Xiaochuan also mentioned that Libras trusteeship mechanism is not yet clear. How to calculate the amount of trusteeship and who will be trustee remain to be solved. Self-trusteeship will have a bigger problem, because there is a bigger interest motivation among them.
The adjustment of exchange rate policy is more urgent
Zhou Xiaochuan believes that the emergence of Libra poses more challenges to the renminbi.
Zhou Xiaochuan further said that the strength of money is directly related to the issue of capital flows. Currently, the strong currency is the US dollar. In the future, retail shopping and asset transactions can be directly used in US dollars, which will also lead to capital flows. Capital flows depend not only on investment opportunities and interest spreads, but also on the flow from weak currency countries to strong currency countries, especially when there are crises and fluctuations, because of a sense of security.
How does Libra influence monetary policy? According to CITIC Securities Research, Libra, as a stable currency and encrypted currency, aims not at a single national currency, but at a package of currencies. This way, Libra will not be overwhelmed when risks arise in a single country, so that Libra has a certain risk-aversion property and can increase the risk-aversion for individuals. The potential of risk channels, which will make it more difficult for the state to control international capital flows, will have an impact on the central banks monetary policy.
Huang Yiping believes that the adjustment of exchange rate policy has become an important task at present.
Huang Yiping suggested that the management of cross-border capital needs to be further improved in order to make the exchange rate more flexible and promote the process of RMB internationalization.