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Blockchain application scenario: cash digitization

Time:2020-04-05Popularity: Author: YaoQian

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It seems that the digitization of cash and the digitization of reserves (that is, the aforementioned digital depositary receipts) are not essentially different, only that the former is for the public, while the latter is limited to inter-bank circulation, but facing the public raises a problem. Allowing the public to open an account with the Central Bank, the Central Bank will face great service pressure, and may cause the deposit to move, resulting in a narrow bank.


One solution is the 100% reserve requirement model. The agency agency deposits 100% of the reserve fund with the central bank, and then issues the corresponding amount of digital currency on its account book as the central bank digital currency. IMF economists call it synthetic central bank digital currency (sCBDC). Accordingly, after 100% of the reserve funds of third-party payment institutions in China are deposited with the central bank, the funds in their virtual accounts are the central bank's digital currency. If this is the case, then China has long been the world's first big country to realize fiat currency digitization.


However, after careful consideration, this idea has flaws: First, technically, 100% reserve deposit and withdrawal means that the full life cycle of digital currency issuance, circulation, and withdrawal must be attached to the traditional account system, especially the cross-institution CBDC Circulation, in addition to the CBDC account book update, but also to deal with the clearing between the corresponding reserve accounts, can only sacrifice system flexibility and limit the amount of control to deal with, and also need to set up a special clearing organization to provide interconnection and interworking services. This not only increases the pressure and complexity of the central bank's central system, that is to say, it still does not solve the central bank's service pressure, and it is difficult to achieve the requirement of "account loose coupling"; second, management, the central bank and operating agencies in this way The issuance and circulation process is tightly bound, and the central bank still bears the pressure of centralization. How to ensure that the agency operating agency does not over-issue currency after 100% of the reserve is prepared, especially when the payment network operated by the agency operating agency is not under centralized control, it is more difficult for the central bank to control the currency issuance of the operating agency layer. To a certain extent, it also constitutes some reasons for opposing the application of blockchain technology to CBDC.


The perspective determines the way of thinking. If you look at it from another angle, you will get another completely different and better solution. Now referring to CBDC, many people understand the technical logic of CBDC from top to bottom, from central bank issuance to commercial banks, and then from commercial bank issuance to personal perspective, so there is always a worry about messing up invoices. Physical currency is subject to the printing and making of coins, but it is not necessary, but the "printing and making of coins" of digital currencies can be completed in an instant without such restrictions, and this is its advantage.


If you look at it from a bottom-up perspective, you can be surprised to find that the end user of digital currency does not have the concept of "issuance", but the concept of "exchange", which is how much cash in hand and how many deposits to exchange for CBDC. Therefore, from this perspective, the problem of invoices is not so prominent. The CBDC exchanged by the agency operating agency is not the currency issuance quota given by the central bank, but the result of users using real real gold and silver to exchange in equal amounts. The central bank only statistics and supervises relevant information from a global perspective.


In fact, no matter whether it is a private stable token or a CBDC developed by various countries, it is an idea of on-demand exchange, rather than the expansion of table issuance, which is a very critical point. This is of great significance to monetary policy, which shows that there is no fundamental change; for the technical route, it means that you can not stick to the issuance process of physical currency, and the system design can be more concise, so the situation is greatly improved. .


Based on the bottom-up exchange perspective, a simplified version of CBDC can be proposed. The specific idea is: the business is initiated by the bottom customer, and the customer applies for redemption of CBDC and escrows it to the agency operating agency. The agency operating agency records the client's custody of the CBDC's ledger, and establishes a separate ledger for each custodian customer. After receiving the client's request to redeem and custody CBDC, the agent operating agency will record the equivalent amount of CBDC in the client's account while collecting cash or deducting the client's deposit, and then return the cash or deduct the deposit reserve to the central bank, and Mixed and custody to the central bank in batches.


The central bank records the total ledger of the agency's operating agency, which is a concept of total amount, and constitutes a two-level double ledger structure with the detailed ledger of the agency's operating agency. When a CBDC payment occurs between customers of the same agency operating agency, it is only necessary to change the ownership on the detailed ledger of the agency, without changing the central bank's general ledger. When a cross-agent operating agency's CBDC payment occurs, the relevant agency operating agency will first process it interactively to complete the change of ownership of CBDC on their respective ledger, and then the central bank will periodically change the general ledger of each agency on the general ledger. In order to improve efficiency and reduce risks, we can consider introducing mechanisms such as continuous net position adjustment and liquidity savings (LSM).


This scheme has the following advantages: First, it is clear that the holder has full control over CBDC. Without the signature or consent of the holder, no other subject can use CBDC. This makes CBDC truly possess cash properties, which are fundamentally different from deposit currencies.


Second, the central bank does not create separate files for the bottom customers, that is to say, the general public does not “open accounts” at the central bank, reducing the service pressure of the central bank, and at the same time truly fulfilling the requirement of “account loose coupling”. The CBDC system is relatively independent of the RTGS system.


Third, each agency operating agency can build on its own expertise and build on its own expertise to build its own digital currency agency operating system based on its own understanding, which is conducive to competition and easy for customers to choose. Because it is on-demand exchange, rather than extended watch issuance, there is no worry of over-issuing currency at the operating agent level. In addition, although the bottom customer transaction information is only stored in the middle layer and not stored in the central bank's ledger, for policy or regulatory needs, the central bank has the right to extract the details of the information to the next level of agency operation agencies, so as to operate in a distributed manner Under the conditions, centralized management and control have been realized.

Tag: Blockchain  

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