Fmr Central Bank Governor Zhou on Digital Currency & Electronic Payment (DC/EP)

Not to challenge the USD or sideline Chinese Big Tech

Zhou Xiaochuan, the former governor of the People’s Bank of China from 2002 to 2018, gave a detailed speech on China’s DC/EP (Digital Currency Electronic Payment) on Saturday, May 22, at the 2021 Tsinghua PBCSF Global Finance Forum.

Bloomberg, Global Times, and CGTN ran brief reports of his speech, but your Pekingnologist thinks it deserves more attention, not only because Zhou is highly respected both domestically and internationally (Scott Kennedy, CSIS), but also because he responded specifically to the various points featured in international media - in Zhou’s own words:

在媒体和各种讨论各种声音的情况下,我们还是需要增强沟通,增强这方面的讨论,使社会包括全球各个方面,能够对数字货币的进展和开发有更明确的了解以及对中国DECP和e-CNY有更好的了解。

With all the media and discussions and voices, we still need to enhance communication and discussions in this area, so that society, including the global community, can have a clearer understanding of the progress and development of digital currencies and a better understanding of China's DE/CP and e-CNY.

If you haven’t been familiar with the prevailing Anglophone narrative on DC/EP, read James T. Areddy’s impactful piece on the Wall Street Journal in April, which stands out among numerous similar reports.

There are not many “analyses” in this particular newsletter - Zhou was mostly very clear, and your Pekingnologist isn’t exactly an expert on DC/EP - or anything else. So this is largely just a translation, based on the transcript published (Mandarin) on the website of Phoenix TV.

To make the sharing easier, the English translation of Zhou’s speech in a PDF has been uploaded to Google Drive.

There is another 269-page PDF containing all the speeches - mostly in Mandarin - made by guests to the 2021 Tsinghua PBCSF Global Finance Forum. Zhou’s speech is from Page 95 to 108. The guests are influential Chinese and international figures in finance and economics so you may want to take a look at them, also uploaded to Google Drive.

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Summary by your Pekingnologist:

1) DC/EP is not designed to replace the U.S. dollar as the reserve currency or the international payment currency, to begin with.

2) DC/EP helps RMB internationalization somewhat, but not a big help. RMB internationalization has much more to do with China’s reform and opening up and institutional arrangements.

3) DC/EP is not intended to sideline existing third-party payment channels (Alipay, WeChat Pay, etc.)

4) China’s R&D and pilot of DC/EP is shall NOT aim unrealistically high, i.e. solving a lot of problems all at once.

5) Controlled anonymity, a principle of China’s DC/EP, is to strike a balance between privacy protection and anti-money laundering.

6) China’s DC/EP should prioritize the improvement of the retail part of the payment system, not other parts of the system. Some payments, such as international trade and cross-border remittance, cannot be significantly improved by DC/EP alone.

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今天,我想讲一个学术问题,讲一讲“数字货币和电子支付系统”。

这个题目前一段时间已经讨论很多了,而且确实也是党中央国务院都明确加以关注并列入了“十四五”规划之中的,要积极探索发展试点推广的内容。但我看了很多媒体在这方面的报道和评论,发现实际上还是有很多的概念需要进一步明确,有一些方向问题还需要探索。尽管中国已经进入了DC/EP的研发和试点阶段,但对这个问题可能理解上还有很多需要讨论的地方,所以我借此机会再跟大家交流一下,同时我感觉它也是国际上感兴趣的问题。当然我现在这个位置也是作为一个旁观者,对于一些在研发和试点过程中的具体问题其实我也是有一定距离的,观察也不是很准确,我想就这个题目跟大家交流探讨一下。

Today, I would like to talk about an academic issue, "digital currency and electronic payment system."

This topic has been discussed a lot for a period of time, and it is indeed a clear issue of the Communist Party of China Central Committee and the State Council and has been included in the 14th Five-Year Plan. DC/EP is to be actively explored, developed, piloted, and promoted. However, after reading many media reports and comments in this area, I found that there are still many concepts that need to be further clarified and some issues on the direction of DC/EP still need to be explored. Although China has already entered the R&D and pilot phase of DC/EP, there is still much to discuss in terms of understanding this issue, so I take this opportunity to share (my opinions) with you. At the same time, I feel that it is also of international interest. Of course, I am now in this position as an observer, and I am actually at a certain distance from some specific issues in the R&D and pilot process, and my observation may not be very accurate, but I would like to discuss this topic with you.

首先媒体特别是外媒对这个问题有些讨论会引起某些误解。我刚才说了其实过去的几年时间,我们对这些基本概念都做了很多讨论,但是并不是说大家都取得了一致认识,或者是不见得大家都对这个问题有深刻的了解。

First of all, the media, especially the foreign media, had some discussions on this issue which caused certain misunderstandings. As I said earlier, we have actually had a lot of discussions on these basic concepts in the past few years, but it is not that we have all gained a consensus or have a deep understanding of this issue.

举几个例子,外媒现在比较多的一种说法,是中国的DC/EP或者e-CNY不管怎么发展也替代不了美元在国际上的主导地位。我觉得这个说法本身命题就不太对,因为DECP的发展主要是立足于国内支付系统的现代化,跟上数字经济和互联网时代的步伐,提高效能,降低成本,特别是为零售支付系统服务,本来设计的目的和努力的方向就没有想取代美元的储备货币地位和国际上支付货币的地位。

To cite a few examples, one of the more common statements in the foreign media now is that China's DC/EP or e-CNY cannot replace the dominant position of the US dollar in the international arena, no matter how much it develops. I think this is not a correct proposition, to begin with, because the development of DC/EP is mainly targeted on the modernization of the domestic payment system, keeping pace with the digital economy and the Internet era, improving efficiency, and reducing costs, especially for the retail payment system, which is not designed to replace the U.S. dollar as the reserve currency or the international payment currency.

再有一种说法也是外媒说的比较多,就是把数字货币的研发和试点与人民币国际化密切挂起钩来,认为数字货币对人民币国际化帮助不大,或者说也实现不了人民币国际化。我觉得这个问题,人民币支付系统的现代化、数字化对于提高人民币的地位,提高人民币的跨境使用会有一定程度的帮助,但也不是太大的帮助。人民币国际化更多的是取决于体制、政策上的选择,更多地取决于我国改革开放的进展,而不是取决于技术上的因素。

There is another argument, which is also more talked about by foreign media, that the development and piloting of the DC/EP is closely linked to the internationalization of RMB, and that the DC/EP is not very helpful to the internationalization of RMB, or that it will not achieve the internationalization of RMB. I think this issue, the modernization, and digitization of the RMB payment system will help to a certain extent to improve the status of the RMB and to improve the cross-border use of the RMB, but it is not a big help. The internationalization of the RMB depends more on institutional and policy choices, and more on the progress of China's reform and opening up, rather than on technical factors.

再有一种议论说人民银行推动的DECP和e-CNY是想取代现在第三方支付的角色,我觉得这也是一种妄议。中国人民银行明确地说DECP的计划是一种双层系统,而且整个研发队伍是由人民银行组织,由主要商业银行,包括工农中建等,还有电信营运商和几大第三方支付机构共同参与研发,都是在他们以往工作的基础上,瞄向升级换代的新台阶。大家都是在一条船上,当然在一条船上的人有时候也会有不同意见,有时候也可能在有些问题上会有争议,但毕竟是一条船上。并不是有些人说的好像是一种内斗,谁会取代谁的说法。

There is also the discussion that the DC/EP or e-CNY promoted by the People’s Bank of China is trying to replace the current role of third-party payments, which I think is also false. The PBoC clearly said that the DC/EP plan is a two-tier system, and the whole R&D team is organized by the People's Bank of China, with the participation of major commercial banks, including the ICBC, Agriculture Bank of China, Bank of China, China Construction Bank and others, as well as telecom operators and a few major third-party payment institutions, all aiming at upgrading to a new stage based on their previous work. Everyone is in the same boat. Granted, people in the same boat sometimes have different views, and sometimes there may be controversy on some issues, but after all, it is the same boat. It is not what some people say as if it is a kind of infighting, or who will replace who.

前两天我正好看了一个电影,讲的是打排球的故事。我想举个例子。排球运动员怎么训练,排球要想加大进攻和扣球的力度,运动员就需要练肌肉。结果边上可能有人看到这个训练以后就开始说风凉话了,说“你肌肉练的是不错,但是你不管怎么练要想参加举重比赛拿名次,门都没有”。球队说我们根本就没打算去参加举重比赛,别拿这种根本不着边的事来说风凉话。

I happened to watch a movie the other day about playing volleyball. I wanted to use this as an example. How volleyball players train (themselves)? Playing volleyball, one wants to increase the strength of the offense and smash, so the athletes need to train muscles. Then some people on the side see this training and then start to say things like "your muscle training is good, but however you train, you’ll have no hope in winning any weightlifting competition." The (volleyball) team would say we have no intention to participate in weightlifting competitions (at all), so don't talk about such irrelevant things.

我举这个例子就是想说,有些莫须有的概念或者提法其实是缺乏对研发计划和试点的理解,同时也容易造成“这山望着那山高”。明摆着计划已经提出来了,已经在系统建设和试点过程中了,不要打着排球的同时又想在别的运动项目上得冠军,这可能是有问题的。

I cite this example to say that some unwarranted concepts or references actually originate in a lack of understanding of the R&D program and the pilot (of the DC/EP). At the same time, these misconceptions are prone to causing the thinking “that mountain is always higher than this one”/the grass is always greener on the other side of the hill. The plan has already been proposed, and it is already in the process of system building and piloting - do not play volleyball and at the same time wanting to win in other sports, which could be a problem.

These highlighted sentences appear to be a warning to some of the domestic audience: the ongoing DC/EP program shall stick to its set cause and not be induced by all the exaggerations to aim for unrealistically overblown targets that Zhou “debunked.”

再有一个是关于对可控匿名的议论。其实支付系统必然要在保护隐私和反洗钱、反恐、反毒品和反跨境赌博之间取得一个平衡。一方面保证隐私,同时还要对某些活动实行必要的监控。因此对这件事如果从两个角度来看会有人站在左边说你保护隐私不够,另外有人站在右边说你纵容了洗钱毒品交易。所以必然是在中间的某一个平衡点,但是这个平衡点也可以选择稍微偏左一点或者稍微偏右一点。中国DECP明确提出的概念叫可控匿名,从可控匿名本身来讲它也并不是一个数学上能够精确定位的点,但是它表达的意思就是保护隐私和反洗钱反毒品交易,在这中间找到一个平衡点。大家可以再深入的研究这个平衡点究竟在哪,但也不要拿这个事有意或者刻意地贬低或者攻击DECP的进程。

Then there is the debate about “controlled anonymity.” In fact, payment systems necessarily have to strike a balance between protecting privacy and anti-money laundering, anti-terrorism, anti-drug, and anti-cross border gambling. On the one hand, privacy should be guaranteed; at the same time, the necessary monitoring of certain activities has to be implemented. So if you look at this from two perspectives, there are people on the left who say you're not protecting privacy enough, and there are people on the right who say you're condoning money laundering and drug dealing. So necessarily a balance is somewhere in the middle, but that balance can also be a little to the left or a little to the right. The concept of controlled anonymity, as explicitly proposed by China's DE/CP, is not a mathematically precise point in terms of controlled anonymity itself, but it expresses the idea of finding a balance between privacy protection and anti-money laundering and anti-drug dealing. We can look deeper into where this point of balance is, but we should not intentionally or deliberately use this issue to belittle or attack the DE/CP process.

还有一个问题就是有人谈论的数字货币的发行权是否要经过特别的立法等等,后面有机会我也会说几句,可能这中间也有很多概念方面需要探讨的内容。

There is also the issue of whether the power to issue digital currencies should be subject to special legislation and so on. and I will say a few words about this later when I have the opportunity, and there may be a lot of conceptual aspects that need to be discussed in the middle of this.

总之在媒体和各种讨论各种声音的情况下,我们还是需要增强沟通,增强这方面的讨论,使社会包括全球各个方面,能够对数字货币的进展和开发有更明确的了解以及对中国DECP和e-CNY有更好的了解。

All in all, with all the media and discussions and voices, we still need to enhance communication and discussions in this area, so that society, including the global community, can have a clearer understanding of the progress and development of digital currencies and a better understanding of China's DE/CP and e-CNY.

Zhou’s speech gets quite technical and theoretical from now on.

第二个方面,我想谈一下关于支付系统现代化,究竟抓哪个重点呢?首先我们说数字货币从全球角度来看有很多不同的侧重点,有的侧重对零售系统效能的提高,有的重视批发交易,也有的注重交易所和金融市场的交易可不可以采取新的支付和结算体系。有人说全球有那么多贸易,包括商品贸易和服务贸易,商品和服务贸易是否能更方便。脸书最开始推Libra的时候,觉得跨境汇款不方便,不能提高跨境汇款的方便性。也有个别人提到跨境投资的方便性,所以是多个领域都可能有发展的前景,我想说一下我们究竟应该注重什么问题。整体来讲,支付系统现代化是一段时间迈一个台阶,这个台阶一般来讲是比较大的台阶,大家才有足够的动力,比如像手机更新换代似的,有的厂商几个月就发表一个版本,但是从用户的角度来讲我的手机才花钱买的,而且还可以用,性能上没差多少。所以一定是觉得这个台阶要比较大,以后才会考虑去升级,特别小的台阶,微小的改进我们就要换系统的话有可能动力不足。所以要用这种差距化,衡量台阶到底迈得有多大来看我们选择什么样的方向。

Secondly, I'd like to talk about modernizing the payment system. What should we focus on in modernization? First of all, we say that digital currencies can have many different priorities from a global perspective - some focus on improving the effectiveness of the retail system, some focus on wholesale transactions, and some focus on the possibility of adopting a new payment and settlement system for transactions on exchanges and financial markets. Some say there is so much global trade, including trade in goods and services, so can trade in goods and services can be more convenient (?) When Facebook first launched Libra, it felt that cross-border remittances were inconvenient and could it be made more convenient (?) Some people also mentioned the convenience of cross-border investment. So it is possible that there are prospects for development (of DC/EP) in several areas. I would like to talk about what we should focus on. On the whole, the modernization of the payment system is taking one step after one period of time, and this step generally speaking needs to be a relatively large step, so people have enough motivation (to do it).

For example, it’s like the upgrading of a smartphone. Some manufacturers published an update every few months, but from the customer's point of view, he or she just spent money to buy the smartphone not long ago, and the smartphone was still good enough, and the upgrade might not have brought large progress. (So the customer might refrain from buying the upgraded phone instantly.)

So, we would only think about upgrading the system only if this step is relatively large. After that, we would think about upgrading. Very small steps and tiny improvements offer insufficient incentives to change the system. So we gotta use the gap (before and after the upgrading) to measure how big the step should be, to decide what direction we should choose.

怎么看这个台阶呢,一个是看系统的功能,它的效能怎么样,它的表现怎么样。第二个看成本,是不是成本能够降低,效能跟成本一比就是性价比。此外还要看看这个系统出错的可能性,因为金融系统涉及到稳定,涉及到信心,对出错的概率是非常关注的。还有一个就是很难避免百分之百不出错,小概率会出错,出错以后究竟能不能纠正这个错误。比如说支付错了,能不能退款,能不能止损,信用卡里也有一个叫charge back,就是能把这个钱找回来。再有一个从性能上风险控制的能力,这个系统有多强的风险控制能力。有时候一些技术从技术开发的角度来说,非常希望能用他的技术,但是从金融系统的角度来说,对于稳定性、风险控制、出错概率以及纠错能力的重视,可能比从技术角度来讲要求更高一些。

How to look at this step? One is to look at the function of the system, how effective it is, how it performs. The second is to look at the cost, whether the cost can be reduced, the efficiency, and whether it is cost-effective. In addition, we should also look at the possibility of errors in the system, because the financial system involves stability and confidence, the probability of errors is a huge concern. Another angle is that since it is difficult to be 100% error-free, there always remains a small probability of error, so can we correct the error after it happens? For example, if there is a wrong payment, can you refund, can you control the damage? There is a function in the credit card system called “charge back.” That is, to get the money back. Then there is the ability to control the risk in the performance, how strong the system is in its ability to control the risk. Sometimes, from the (narrow) viewpoint of technology development, it is highly expected to use that technology (because it is advanced). But from the point of view of the financial system, stability, risk control, the probability of error, and the emphasis on the ability to correct errors may take a higher priority than just the technology.

我们从这几个角度看一下,从中国来讲比较重视零售系统,这个台阶可以迈得比较大。中国是现金用的比较多的社会,但是从全球来看也不是特别突出。我估计发达国家即便是信用卡比较普及的国家,也会感到随着互联网特别是移动互联网的出现,这个台阶还是很值得要迈上去的。另外这也是客户的需求,客户也不希望有太复杂的、太多种多样的支付方式。很希望在有手机以后,通过移动互联网作为一个主流的零售支付方式的出现。所以这个台阶成本节约也是很大的,向前迈进的动力是比较大的。

From these perspectives, China attaches more importance to the retail system, which can take a bigger step. China is a society that uses more cash, but its cash use is not particularly prominent from a global perspective. I estimate that even in developed countries where credit cards are more popular, it is still worthwhile to take this step up (in the retail system) with the emergence of the Internet, especially the mobile Internet. In addition, this is also the demand of customers, who do not want to have too complicated, too many different payment methods. They, with smartphones, would like to see the emergence of a mainstream retail payment method via mobile internet. The cost savings of this step is great, so the impetus to move forward is relatively large.

从批发的角度,现在有一些国家要搞CBDC,从我个人观察来讲中国e-CNY并不是完全的CBDC,当然也可以归结为CBDC这个大议题里进行讨论,但是它也有自己的特点。有一种CBDC就是主要转向批发系统,多数的老百姓和非金融系统的人,对于支付系统的批发环节,是不太了解的,他并不知道背后的清算系统,不知道它背后的银行清算结算等是怎么工作的。也不太知道这个系统目前是不是效能比较差、是不是出错、是不是成本过高、是不是向银行多收费,是不是收的这些费用间接的转嫁给其它的银行客户。随着技术的发展,批发系统也有很大潜力进一步提高。但是目前并不是效能在成本上有很大的改进余地,即便是改进的话也不是太明显,社会上也不会有太大的感觉。总体来讲我们觉得批发环节也要给予注意,但是,这个台阶似乎现在迈不了太大,要迈就是一个相当小的台阶,是这样一种做法。

From the wholesale point of view, there are now some countries looking to engage in CBDC (Central Bank Digital Currency). From my personal observation, China’s e-CNY is not exactly CBDC, but of course, it can also be included in the big topic of CBDC discussion. However, China’s e-CNY also has its own characteristics. There is a kind of CBDC that’s mainly on the wholesale payment. Most of the commoners and people outside the financial do not know much about the wholesale part of the payment system, they do not know the clearing system behind it, they do not know how the bank clearing and settlement behind it works. They don’t know how the clearing system behind it works, how the bank behind it clears and settles, etc. They don’t know if the system is currently less effective, if it makes mistakes, if it costs too much, if it overcharges the bank, and if the fees charged are indirectly passed on to other bank customers. With the development of technology, there is a great potential to further improve the wholesale system. But at present, there is not a lot of room for improvement in cost-effectiveness; even if there is an improvement, it is not very obvious, and society will not feel too much about the improvement. In general, we feel that the wholesale (part of the payment) system should also be given attention, but it seems that the step/potential here is not too big now, and even if we take a step here, it would be a rather small step - that’s the approach.

Your Pekingnologist doesn’t know much here, as Zhou rightly observed. But what’s clear is Zhou was saying China’s DC/EP won’t change the wholesale part of the existing payment system - whatever it means :(

还有交易所,交易所现在所有系统的运行还是非常好的,除了个别情况下特别是由于高频交易出现过像英国的闪崩这种情况,总体来讲运行还是比较好的。虽然交易所整个的系统,包括所谓价格优先、时间优先的排队自动撮合系统,以及后面的证券登记和交割的系统也有不少成本。但是在这方面的呼声并不高,如果大家希望降低交易成本的话,可能更多的是减少印花税,印花税比技术系统的成本更受到关注。

And the exchange. In the exchange, now all systems are still in very good operation, except for individual cases, especially due to high-frequency trading, such as the flash crash in the United Kingdom. In general, the operation is still relatively good. Although the entire system of the exchange, including the so-called price-first, time-first queuing automatic aggregation system, as well as the back of the securities registration and delivery system also has a lot of costs. But the call in this regard is not high, if we hope to reduce transaction costs, it may be more to reduce the stamp duty, stamp duty than the cost of technical systems are more concerned.

另外也不是交易结算越快越好,这么多年大家都在讨论是不是交易所技术系统有这个能力可以提供T+0,可以当日回转交易,可以更多的提供高频交易。但实际上市场人士的讨论,对此也提出一定的怀疑和挑战,并非越快越好。整个支付系统也包括交易所系统,未来都有可能实现实时全额交易系统,但是实时全额交易系统并不是在各个环节都适用的一个好的选择。这就是为什么ISDA衍生品交易协会反复主张说你要搞差额结算,它对市场参与方的风险控制更有好处,同时降低了由于每笔实时全额交易所要求的经济资本,要求的所谓风险的衡量。从交易所系统来讲,不是说速度越快越全额实时交易就越好。因此也涉及到这个台阶究竟迈的有多大的余地的问题。

Also, it’s not the faster the transaction settlement, the better. For so many years everyone has been discussing whether the technology system in the exchanges has the ability to provide T+0, to provide same-day swing trading, and to provide more high-frequency trading. But in fact, the discussion of market participants, also raised certain doubts and challenges - it is not the faster, the better. It’s possible for the whole payment system, including the system in the exchanges, to implement a real-time, full trading system, but a real-time, full trading system is not a good choice for every segment.. That's why the International Swaps and Derivatives Association repeatedly advocates that you need to engage in cash settlement, which is more beneficial to the risk control of market participants while reducing the economic capital and the so-called risk measurement required for real-time physical settlement. In terms of the system in the exchanges, it's not that the faster the full, real-time trading, the better. Therefore, it also involves the question of how much room there is for this step to take.

Possible translation errors in the paragraph above :(

下面再看一下国际贸易,国际贸易实际上是跨境支付里最主要的内容,包括商品贸易和服务贸易。但是这个贸易作为外界人的想象,很容易觉得国际贸易能不能就像我们老百姓去商店买东西的时候,看好的东西一手交钱一手交货,直接就这么做就行了。实际上国际贸易绝大多数情况下都是有一定批量的,涉及到比这个复杂的多的一种系统。首先像现在的商品除了散货以外多数都是集装箱,一个集装箱装很多东西,涉及到品种、规格等很多信息都需要在合同中加以规定,事先要做很多沟通。更主要的是涉及到运输仓储和保险,运输环节究竟是怎么样的,会不会有风险,会不会运输环节会有损失,仓储环节怎么样,会不会东西放到里头坏了,这些东西都导致进一步的一系列服务,而且会涉及到金融。

Let’s look at international trade. International trade is actually the main content of cross-border payments, including trade in goods and services. But for outsiders, they are prone to imagining that, can international trade be conducted just going to a store to buy things? When one sees something good, he or she pays the money and gets the product - as easy as that? In fact, the vast majority of international trade involves a certain volume and consequently a more complex system than this. First of all, the majority of goods - other than bulk goods - are in containers. A container contains a lot of things, involving many varieties, specifications, and other information which need to be specified in the contract, and there has to be a lot of communication in advance. More importantly, it involves transportation, warehousing, and insurance. What happens in transportation? Will there be risks? Will there be losses? How about the storage? Will things in the warehouse go bad? All these things lead to a series of further services, and will involve finance.

支付角度来讲,跨境支付涉及到汇率,涉及到币种选择。除此之外由于出口商还需要有贸易融资,货发出去了等对方收到并验货到付款,这段距离下一步生产已经开始,所以需要贸易融资,贸易融资过去典型的一个工具就是信用证融资,开了信用证以后就去融资了,下一轮生产就可以找银行借钱。这种金融服务也必然要包括到里面作为一个重要的成分。

From the perspective of payment, cross-border payment involves exchange rate and currency selection. In addition to this, exporters also need to have trade financing - when the goods sent to the other party were received and inspected, get paid. [One sentence is missing because the Mandarin wasn’t understood.] So there is the need for trade financing. A typical tool in trade financing is the letter of credit financing when enables financing and the next round of production by borrowing from banks. This financial service must also be included in [the payment system?] as an important component.

此外有相当多的中小企业在做国际贸易,他们跨着国家、有的时候跨着大州,相互之间也不怎么认识。有的人虽然认识也不知根知底,所以必然需要找一家银行,A国找一家自己熟悉的银行,他开户的银行,B国也找一家他熟悉的银行,银行之间建立了代理行关系,代理行关系除了做付款以外,实际上是建立一种信任关系,帮助企业之间建立的人的关系。整个这套体系虽然很复杂,而且有人抱怨可能效率不高,还可以提高,但是并不是像有些人想象的就像老百姓去商店里买东西,一手交钱一手交货,给钱就完了弄这么复杂干什么。还要想想其中的理由,这个系统的改造,也不是说现在所想象的数字货币那么容易就把它替代掉。这个台阶可能需要有更多的功能考虑,然后看下一步有什么样的机会能够升级换代。

In addition, there are many small and medium-sized enterprises in the international trade, they (do business) across the countries and sometimes cross the continents, and do not know each other very well. They know some counterparties, but do not trust each other well, so it is necessary to find a bank. They find a bank in Country A, a bank they are familiar with and probably they opened an account with, and they find a bank they are familiar in Country B. The banks established a correspondent bank relationship - in addition to making payments, it is in fact to establish a relationship of trust. It is to help establish a human relationship between different companies. Although the whole system is very complex, and some people complain that it may not be efficient and can be improved, but it’s not as some people imagine that it could be just like going to a store and buy stuff - not that easy. You have to think about it. The transformation of the system is not easy, it’s not easily replaceable by imagined digital currency. This step may need to take into consideration more functions, and then (let’s) see what kind of opportunities there are to do an upgrade as the next step.

Zhou appears to be saying DC/EP cannot easily replace the existing payment system in international trade as imagined by some.

再有一个就是汇款,跨境汇款确实成本比较高,有一些银行在跨境汇款中收费也确实太高了,但是跨境汇款的主要障碍,脸书抓到了跨境汇款的热点,所以提出用Libra做跨境汇款,而且为了让更多的国家接受,他知道很多国家会担心美元化,所以用一篮子的货币。结果他没想到一篮子货币国际上讨论过很多年,大家都想方设法从各个角度看国际货币体系怎么弄,所以这并不是一个很简单的事。尝试了一年以后发现一篮子货币很难做到,所以就从Libra改为Diem了,只针对美元。跨境汇款既有技术方面的难度,更有政策制定方面的难度,特别是涉及到跨境劳工向家里汇款的,涉及到发达国家和发展中国家,发达国家之间的相互汇款,尽管有美元、日元、欧元,相对来讲效率比较高的,成本也不算太高,但是发展中国家成本就比较高,时间延迟也比较多,因此这是一个迈台阶的机会,但是也不是单靠技术系统就能解决的。它有赖于制度政策方面的解决,特别是涉及到汇率制度,外汇管理,有一些国家有外汇管制。很多年轻人可能不知道,中国在改革开放之前,有那么多海外华侨,华侨往家里寄钱,寄的可能有美元有日元,但是你是拿不到的,必须换为人民币,当时的汇率又非常不合理,拿少了怎么办呢,就额外再给一部分调汇券。中国虽然改革开放这些阶段早就迈过了,但是看很多其他的发展中国家,实际上还是面临类似的各种各样的问题,另外他们也确实都担心美元化带来的风险。因此我们在选择利用数字化,利用互联网提高支付系统现代化,并且迈上一个台阶的时候,究竟在哪个方向上这个台阶可以迈的比较大,取得的效果比较明显,这是我觉得在选择方面需要考虑的。

Then there is the remittance. Cross-border remittance is indeed expensive, and some banks’ charge in cross-border remittance are indeed too high. But the main obstacle of cross-border remittance is - Facebook caught the spot of cross-border remittance, so proposed to use Libra to do cross-border remittance, and in order to make more countries accept Libra, Facebook knew that many countries will worry about dollarization, so Facebook proposed a basket of currencies. However, Facebook did not understand that a basket of currencies had been discussed internationally for many years, and everyone tried to find ways to see how to get the international monetary system from all angle - it was not a simple thing. After trying for a year, Facebook found that it was difficult to do a basket of currencies, so Facebook changed from Libra to Diem, focusing only on the U.S. dollar. Cross-border remittances are not only difficult in terms of technology, but also in terms of policy formulation, especially when it comes to cross-border labor remittances to home, involving developed and developing countries. For mutual remittances between developed countries, although there are the U.S. dollar, the yen and the euro, which are relatively efficient and not too costly. Developing countries face higher costs and more delays. So this could allow for a step forward, but it cannot be solved by the technology system alone. It depends on the solution of the financial system and national policy, especially when it comes to the exchange rate system, foreign exchange management. There are some countries that have foreign exchange control. Many young people may not know that before China's reform and opening up, there were so many overseas Chinese and they sent money home in US dollars and yen, but at home you can not get the US dollars and yen, which must be exchanged for RMB. The exchange rate at the time was very unreasonable, so what to do when the recevier would be losing money? (The Chinese state) would give you some additional foreign exchange certificates. Although China has long passed these stages through reform and opening up, many other developing countries are still facing similar problems, and they are also worried about the risks associated with dollarization. Therefore, when we choose to use digitalization, use the Internet to improve the modernization of the payment system, and to take a step forward, I think we need to consider our choice: in which direction can this step be bigger and achieve more obvious results?

同时也别想一口吃成个胖子,说我弄了一个系统,可以拍胸脯吹牛,既能解决零售支付,又能解决批发系统,交易所系统也都完全改造了,贸易结算、汇款等所有问题都解决了。这个我看也不现实,所以如果做了这个选择,进行了研发和试点,也要有定力不能这山望着那山高。

At the same time, do not dream of becoming fat with one bite - that I got a system now, I can beat the chest bragging in solving retail payment, the wholesale system, the exchange system, trade settlement, remittances and everything. I think this is unrealistic, so if the choice is already made in R&D and pilot, we have to have the determination of not thinking “that mountain is always higher than this one”/the grass is always greener on the other side of the hill.

Zhou appears to be advising China’s DC/EP should be realistic and practical.

最后我说一下关于人民币国际化。我觉得人民币国际化是一个好的题目,中国作为世界第二大经济体,世界第一大贸易国家,货币的地位应该提高,而且也确实有提高的潜力,但刚才所说的技术系统会对此有影响。所以这些年在技术方面也有很多开发,很多支持,譬如跨境人民币的支付系统(CIPS)等等,是否可以利用数字货币CBDC这类东西,上一个很大的台阶呢?我觉得不要太高估技术方面的因素,更多的是体制和政策上的因素,还是一个改革开放的选择,下一步走多大选择的问题。

Let me conclude by talking about the internationalization of the RMB. I think the internationalization of the RMB is a good topic. As the world's second-largest economy and the world's largest trading country, China's currency status should rise, and it does have the potential, and the technology system mentioned earlier will have an impact on this. So there's been a lot of development and a lot of support on the technology side over the years, such as the Cross-Border Interbank Payment System (CIPS) and so on. So is it possible to use something like the digital currency - the CBDC - to take the international status of RMB to a greater level? I think we should not overestimate the technological aspects, but more the institutional and policy factors. It is (ultimately) a choice of reform and opening up and the question of how big the next step should be taken.

首先一个货币能否被广泛接受,可能取决于你的经济体量、贸易体量、对外开放程度,不是说你能够强求国际上的用户做出什么选择,(客户)都是有自主选择权的。所以这种运筹的广泛性,不仅是一个技术特性。一个主要的内容就是货币可自由使用程度,2016年国际货币基金组织,把人民币纳入了SDR,其中一个因素就是人民币可自由使用的程度已经有了很大的提高,但它是一个连续过程,还有继续提高的很大余地。但是不管怎么可自由使用程度还是注意有反洗钱的功能,还要防止避税天堂,防止逃税,防止毒品交易等等,这是一方面。

First of all, whether a currency can be widely accepted may depend on your economic volume, trade volume, the degree of openness to the outside world, but you cannot force the international users to make that choice. (Customers) have the right to make their own choice. So this is not just about technicals. One of the main elements is the degree of free use of the currency. One of the factors that led to the International Monetary Fund, in 2016, adding the RMB in the Special Drawing Rights (SDR) basket is that the degree of free use of the RMB has improved a lot. But it is a continuous process and there is a lot of room for further improvement. However, no matter how free the degree of use the RMB becomes, it is still important to pay attention to preventing money laundering, tax havens, tax evasion, drug transactions, etc. This is one aspect.

再有一个货币抗冲击的能力。大家都知道全球各个国家,各种不同阶段,隔一段时间都会有金融危机,现在大家都知道是2008年这场全球金融危机。但实际上你真正看起来各个国家,都是十多年、几十年之间都会发生金融危机,因此抗冲击能力也是很重要的。因此我们想它还是一个制度因素,中国在未来改革开放的力度可能还会进一步加大,还会做出更鲜明的选择。而这种选择也是取决于发展的路径,改革开放的路径,取决于观点的平衡。其实这个观点也是一种分布,就像我刚才说货币的隐私和反洗钱之间的平衡一样,有的人会认为人民币可自由自用、可兑换是非常好的事,可以尽快去推进。也有的人认为这个是非常糟糕的事,风险很大,尽量不要去做。可能最后是个正态分布,中间的观点比较多,而且它是随着改革开放在不断平移,所以我们说开放进程中的变化可能和人民币国际化有更多的联系,技术方面的因素是基础,是相对比较好做的。包括金融系统在做CIPS的时候,像中国银行这些过去就在跨国支付中起到很大的作用的银行,对他们而言,政策制度明确,利用现有的技术开发一套系统,并不是什么太难推进的事,当然我们也不能低估这种努力。

Then there is the ability of a currency to resist shocks. We all know that various countries around the world, at various stages, would see a financial crisis every once in a while. What we all know now is the global financial crisis in 2008. But in fact, if you really look at each country, there is a financial crisis every decade or several decades. So the ability to resist shocks is also very important. So we think there is also the factor of the system, China may further increase the strength in the future of its reform and opening up, and may also make a more distinct choice. And this choice is also dependent on the path of development, the path of reform and opening up, depending on the balance of views. In fact, this view is also a balance, like the one I talked about just now - between the privacy of the currency and anti-money laundering. Some people will think that the free and convertible RMB is a very good thing, and needs to be pushed forward as soon as possible. Others may think this is a very bad thing, very risky, and try not to do it. It may end up being a normal/Gaussian distribution, with more views in the middle, and it will be moving with the reform and opening up, so we are saying that the changes in the opening up process may have more to do with the internationalization of the RMB, and the technical aspects are just the basis, which can be done relatively easily. When China’s financial system develops CIPS, for example, the Bank of China, the banks used to play a big role in cross-border payments in the past. For them, when the policy and the system is clear, using the existing technology to develop a system is not something too difficult. Certainly we should not underestimate this effort.

同时我在这里也想说,我一直强调人民币国际化。从中央银行的角度,发行的货币是你的负债,很多人认为是你的资产,我还记得在很重要的国际会议的饭桌上,就有非常大腕的嘉宾评论人民币国际化,将来你们在全球可以发人民币,你是有很大的资产的。我说这个你可没说对,从资产负债表的角度发行货币是央行的负债,你要使你的负债的部分,它是可兑现的,它是有购买力的,它是稳定的。而且你要使用货币达到某项功能的时候,是央行要给人家提供这种方便和保证的。所以从这个角度看是一种负债,也就是说不要把人民币国际化过多的看为一种,好像是我可以凭空创造出一种资产,而是你更多的要考虑你要做出的承诺,承担的义务,从资产负债表的角度加以考虑。

At the same time I would like to say here that I have always emphasized the internationalization of the RMB. From the central bank's point of view, the currency issued is your liability. Many people think it's your (the central bank’s) asset, and I remember at the dinner table of a very important international conference, there was a very prominent guest commenting on the internationalization of the RMB, who said that in the future you can issue RMB around the world and you have a big asset. I said on this you are not right, from the balance sheet point of view, issuing currency is a liability of the central bank, you have to make your liability part cashable, with purchasing power, and stable. And it's the central bank that has to provide that convenience and assurance to people when a country is going to promote the currency to achieve a certain function. So from this point of view, it is a liability, which means that you should not look at the internationalization of the RMB too much as if I can create an asset out of thin air, but you should think more about the commitments you have to make, the obligations you have to undertake, and consider it from the balance sheet point of view.

因此,支付系统现代化,DECP和E-CNY会首先对跨境的零售使用,包括旅行者商务访问之间的使用,也包括现在比较时兴的零售网购等方面都会带来提升的体验,同时对人民币会有好处。我们从更广泛的角度来看,批发金融交易、贸易从汇款等等各个方面,要实现人民币的国际化,还需要在政策体制方面不断的向前迈进,我们相信未来在这些方面能够取得进展,才是人民币国际化取得实质性进展的重大步伐。

So the modernization of the payment system, DC/EP and E-CNY will first and foremost bring an enhanced experience for cross-border retail use, including use in business visits by travelers, and also retail online shopping, which is more fashionable now, and will also benefit the RMB. From a broader perspective, wholesale financial transactions, trade, remittances, and other aspects, to achieve the internationalization of the RMB, we still need to make continuous progress in the policy and institutional aspects, and we believe that progress in these aspects will be the major step to make substantial progress in the internationalization of the RMB.

同时我也在不同场合强调它也是一个相对的东西,国际上几种主要的货币相互之间确实是有一个各占多少的份额,反正不能超过百分之百,我多了你就少,除了你自己做得好坏以外,也取决于别人做的好坏。

At the same time, I also stressed on different occasions that it is also a relative thing - several major international currencies are competing for a share between one another - in total, not one currency can get more than 100 percent. If one gets more, others get fewer. So, in addition to doing good or bad in oneself, it also depends on how well others do.

我就借这个机会给大家汇报这样一个题目,也是对五道口金融学院和本次全球金融论坛做一点小小的输入。讲的不对的地方请大家批评指正,谢谢。

I would like to take this opportunity to report to you on such a topic, and also to make a small input to the Graduate School of People's Bank of China and this Global Finance Forum. Please correct me if I am wrong. Thank you.