Is the digital renminbi a killer tool to subvert the hegemony of the US dollar and SWIFT?

In March 2023, a small incident occurred in the internationalization of RMB. The renminbi’s share of China’s cross-border payments reached a record 48% for the first time. , while the dollar’s ​​share fell to 47%. This is the first time that the renminbi surpassed the U.S. dollar and became the largest currency in China’s cross-border trade. This is also a phased result of a series of RMB going to sea incidents. As early as 2021, China-Iran and China-UAE oil trades began to be settled in RMB and local currency. Since then, the UAE dirham has become an important intermediate currency for RMB in international trade in the Middle East. Due to the Russia-Ukraine War, in October 2022, the RMB will become the fifth most traded currency in the world. In February 2023, the Central Bank of Iraq announced that it would abandon the US dollar and allow direct settlement of trade with China in RMB. In March, Industrial and Commercial Bank of China (Brazil) Co., Ltd. successfully handled the first cross-border RMB settlement business. At the end of March, the Central Bank of Brazil announced that the renminbi has surpassed the euro to become the country’s second largest international reserve currency. During the same period, China National Offshore Oil Corporation and France’s Total Energy Company completed 56,000 tons of imported natural gas purchase transactions in RMB. The finance ministers and central bank governors of ASEAN countries stated in the meeting that they would discuss reducing the dependence of ASEAN countries on the existing US dollar, euro, pound and yen in financial transactions, and try to switch to a trading system dominated by local currencies. In early April, the renminbi became the dominant currency in cross-border transactions in Russia. On April 10, Russia’s NBD Bank announced to join the RMB cross-border payment system.

On April 26, Argentine Minister of Economy Massa held a press conference, announcing that Argentina would stop using U.S. dollars to pay for goods imported from China, and would instead use RMB for settlement. It can be said that in the past six months, the speed of RMB internationalization and the advancement of the RMB cross-border payment system have shifted from quantitative changes to qualitative changes. At this time, there is a corner that is easily overlooked by people. A relatively inconspicuous piece of news may be changing the direction of our future global development. On March 28, the Ministry of Industry and Information Technology publicly solicited opinions on the “Guidelines for the Construction of Blockchain and Distributed Accounting Technology Standard System (2023 Edition)”.

The Ministry of Industry and Information Technology stated that by 2023, my country will clarify the top-level design of the blockchain and distributed accounting technology standard system, which basically meets the standardization needs of my country’s blockchain and distributed accounting technology. By 2025, the country will further improve the standard system of blockchain and distributed accounting technology, effectively guide the construction of my country’s blockchain industry, and improve the level of technology and application services. As we all know, the digital renminbi that my country is vigorously promoting is a digital currency based on blockchain technology and distributed accounting technology, and the most important step for the renminbi to go overseas and challenge the US dollar system is to go overseas with digital renminbi. So why does the digital renminbi have the potential to challenge the US dollar? Why does the world need RMB internationalization? It all starts with SWIFT, the giant dragon in front of RMB internationalization.

01

SWIFT, the full name is “Society for Worldwide Interbank Financial Telecommunications”, and the full name in Chinese is “Society for Worldwide Interbank Financial Telecommunications”. A dragon, but it used to be a dragon slayer.

Like Nongfu Spring, SWIFT does not produce financial information, it is just a porter of financial information. More than 100 years ago, as the first wave of globalization in the 19th century successfully brought the world into the old colonial system, the telegraph business began to rise, and the earliest telegraph-based inter-bank transfer business appeared. This kind of financial telegraph service is also the ancestor of SWIFT financial telecommunications, and is also referred to as Telegraphic Transfer. By 1973, taking advantage of the second wave of globalization, in order to further facilitate the flow of funds between banks, 6 international banks took the lead and 239 banks from 15 countries/regions jointly supported the establishment of SWIFT. Today, SWIFT services cover more than 200 countries and regions, providing services to more than 11,000 financial institutions. Why can SWIFT become a giant dragon instead of other cross-border financial service systems? That’s because it has revolutionized communication between financial institutions at the “book same text” level. Before SWIFT, the most commonly used international financial transaction tool in the world was Telex. Telex is a wire transfer service promoted by West Union in 1958. Although it has worked well in decades of development, it has become hot again with the rise of cross-border trade. As a remittance channel that requires manual intervention, Telex’s compatibility with different banking systems and low-level automation has become an increasingly important issue. In the Telex system, the sender must describe each transaction in sentences, which are then interpreted and executed by the recipient. This creates room for human error as bank staff in different countries translate and operate the transfer process. After all, at that time there was no chatgpt for bank staff to accurately and automatically translate foreign languages. At that time, in addition to major customers such as investment banks and securities companies, there were more and more international bank personal customer transfer needs.This also means that Telex, which lacks compatibility and insufficient automation, is increasingly difficult to cope with the financial needs at that time. In June 1964, the International Telegraph and Telephone Consultative Committee (C.C.I.T.T.) adopted a technical standard under the background of multi-party agreement, which also became the harbinger of the development of SWIFT. In the 1970s, both the United States and Europe increased their research investment in machine-readable communication standards. The United States mainly promotes the Marti system launched by Citibank, while the European side launched SWIFT to try to break the monopoly trend of American standards on related industries. SWIFT established a common standard for financial transactions in its early days. This enables banks to read standardized messages sent by SWIFT even if they do not go through the SWIFT network. This means SWIFT can facilitate automated transactions through a standardized format. The use of standardized messages and reference data ensures that information exchanged between agencies is accurate and easily readable by machines.An American banker once recalled: “[Our bank] had its own standards…and then we suddenly realized, why do we have to have our own internal standards? If you use one standard externally, why don’t we use it internally The same standard?…We suddenly realized that it was good for dealing with others and since then used the SWIFT standard internally.” SWIFT has created a series of examples of common international standards in the following decades. These standards include the ISO 9362 Business Establishment Identifier Code (BIC – often referred to as the “Swift” code, used to identify trading parties), the ISO 10383 Market Identification Code (MIC, used to identify exchanges, trading platforms, regulated and non-regulated market and transaction reporting facilities). The Swift standards group has also contributed to the development and implementation of other reference data standards, notably the ISO 17442 Legal Entity Identifier (LEI).

In addition, the SWIFT standards group, as a contractor of ISO, also maintains two open messaging standards: ISO 15022 (evolved from the ISO 7775 standard proposed by SWIFT in 1984 for securities settlement and asset services) and ISO 20022 (Which scope applies to all financial industry processes). Take the ISO 20022 standard launched in the 2000s as an example. On the one hand, it creates a standard method for financial message transmission; , treasury, bank card and securities) message transmission definition. The establishment of standards not only simplifies and standardizes transactions, but also creates moats for SWIFT.

In the early 21st century, while retaining the above-mentioned advantages, SWIFT further upgraded transmission security, speed and expanded services. In addition to being a transfer payment channel, the current SWIFTNet also enables financial institutions to transfer files, match transactions, provide information services, and provide authentication services through the SWIFT network. This revolutionary change lays the decisive foundation for cross-border financial services in the age of automation. There is no doubt that SWIFT is the Qin Xiaozhuan or official script of the modern transnational financial system. Moreover, compared with the previous Telex and other competitors SWIFT in the same period, the efficiency and cost are also extremely advantageous. According to the relevant papers we found in the 1990s, compared with the previous cross-border settlement, SWIFT is 48-192 times faster than the latter, and the fee is only one-seventh of the mail and one-tenth of the telex. Even today, SWIFT is the cheapest cross-border settlement tool in many scenarios. Even though SWIFT has this kind of convenience, SWIFT only had more than 3,000 bank members from 83 countries and regions in the early 1990s, completing a comprehensive surpassing of Telex.It can be said that the current SWIFT is the same as the last wave of globalization giants. Its biggest commercial advantage or moat is the technological first-mover advantage formed by seizing historical opportunities and the channel advantage formed based on long-term inertia. However, with the strong development of the US dollar in international trade, the development of SWIFT is also inseparable from the support of the United States. The early SWIFT was originally designed to prevent Citibank’s MARTI from becoming a proprietary international payment message standard, and Europe, under the leadership of the generation that experienced World War II, was able to realize the value of strategic autonomy, so it can maintain the foundation with the United States political neutrality. However, with the outbreak of 9/11, the United States launched the Terrorist Financial Tracking Program, authorizing the Treasury Department to track terrorist financial flows, and neutrality was broken. Since October 2001, the Treasury Department has been able to obtain the data requests it needs from SWIFT for accounts linked to suspected terrorism. In 2009, SWIFT introduced a new distributed architecture. Data from European SWIFT members will not be stored in the Netherlands and Switzerland, while transatlantic regional messages will be stored in the United States and Switzerland. According to the new regulations, countries outside of Europe are assigned to the transatlantic region by default, although we can also choose to store messages in the European region, but you know, the United States can still know if they need it. After obtaining the data, it is logical that SWIFT has become a weapon in the hands of the United States. In February 2012, the U.S. Senate Banking Committee approved sanctions against SWIFT aimed at forcing the Belgian financial telecommunications network to terminate ties to blacklisted Iranian banks. In March, SWIFT canceled the membership of Iranian financial institutions blacklisted by the United States and terminated the cross-border payment service project for 30 Iranian banks. Of course, in addition to being weaponized, SWIFT, which was formed in 1973, has shown some other commercial weaknesses in the impact of the new era. First of all, SWIFT is old, and its processing speed can no longer fully meet the timeliness needs of modern finance. Friends of cross-border trade should have a deep understanding of the speed of SWIFT. It does not work on weekends, and it usually takes 3-5 working days to complete. Liquidation, if you are lucky, it may be faster, but it is completely different from the instant payment we generally expect now. This is actually related to the fact that SWIFT still needs internal bank clearing. SWIFT is just a porter of information. Every time the information is communicated, each bank needs to check, clear and certify the relevant accounts. If transfers between several banks are involved, each bank needs time to check and clear the accounts, which is naturally time-consuming. Secondly, the handling fee of SWIFT is not cheap, and it will charge a certain handling fee every time the relevant interface is called. We use SWIFT to transfer money when we study abroad. If the money transfer is small, the bank will charge you dozens to 200 for each transfer out and transfer in. If the amount you transfer is high, you will be charged a handling fee based on the standard of a few thousandths. Counting the small loss of the exchange rate when you exchanged currency, you lost hundreds of dollars before you went out. Is it that the whole person is not good. But there is no way, the bank needs to check the information, and you naturally need to pay for it. When our country is promoting the internationalization of RMB, we are also deeply aware of related problems. After all, as the human historical champion of the output value of foreign service trade in the world, we are very clear about the specific commercial problems of SWIFT. From a business point of view, even without the political and economic influence of the United States on SWIFT, we have the motivation to create a new system to improve efficiency and facilitate trade. What’s more, we still have a practical problem: our long-cherished wish has not been realized yet. Continue to rely on SWIFT. If that day comes, the price of realizing the long-cherished wish may be that the products produced in the country can only be used by the domestic market and international friendly markets, and there is no way to quickly purchase and settle raw materials. No matter how well Russia’s fortified economy resists the SWIFT sanctions in this Russia-Ukraine war, the political and economic pressure brought by SWIFT is objective when we make the necessary choices. So we have to open up a new backup road. RMB internationalization is inevitable and the only choice! But I have to say that the rice still needs to be eaten bite by bite. In the last decade, we launched the RMB cross-border payment system, the Cross-border Interbank Payment System, or CIPS for short. But this system itself does not pose a challenge to SWIFT, because it is not responsible for the message service of international financial transactions. In other words, CIPS only allows China’s cross-border clearing to have a unified integrated interface, which is used to connect with SWIFT, etc., but the middle set of switches is still handed over to SWIFT in most cases. Is this okay? Good or bad! The advantage is that we have unified the interface of RMB cross-border settlement, straightened out the domestic cross-border settlement system, and can save time and reduce settlement costs. The bad thing is that he did not solve the direct impact that SWIFT may have on us, that is, if SWIFT does not provide services, my country’s foreign trade settlement system will be unable to pay and clear for a short time. Once there is no alternative system, my country may be forced to seek a system that is less efficient than SWIFT for liquidation for a long time, which will seriously affect my country’s foreign trade. So is there any payment system technology path that is already acceptable to the world and has a fast settlement speed, let us take advantage of it? have! That is digital currency based on blockchain technology.
02

The digital currency we are most familiar with is Bitcoin. But the digital renminbi is fundamentally different from Bitcoin. Ordinary people like us who pay attention to digital currency rarely know that there are not one or two but three blockchain lines behind digital currency. Which three? Public blockchains, private blockchains and consortium blockchains. As the name implies, a public blockchain refers to a blockchain that can be read by anyone in the world, anyone can send a transaction and the transaction can be effectively confirmed, and anyone can participate in the consensus process. Private chains, in turn, refer to blockchains whose write permissions are controlled by an organization and institution, and these software are controlled by a centralized institution. The digital renminbi chose a moderate route and used the alliance chain. Why does the digital RMB use a consortium chain, while Bitcoin uses a public chain?Before answering the question, let us review the blockchain encryption method represented by Bitcoin: Bitcoin will use SHA-256 hash operation in the encryption process to obtain a 256-bit binary number. This binary number has a one-to-one correspondence with this file, but it cannot be used to deduce the file itself. Even if you only change one of the bytes, the generated binary number will be completely different. The Bitcoin system will perform a hash operation on the data of the previous block, and record the hash value in the head of the next block, thus ensuring that the data of the previous block cannot be tampered with, because any change Will cause the hash value to be incorrect. So how do you ensure that the person who transfers money to me with your account is indeed you? Bitcoin uses an asymmetric cryptographic system for decentralization. For example, if we randomly generate a curve, we can calculate two numbers, which are called K and Q. It is impossible to invert this curve with any of K and Q, let alone calculate the corresponding King or Queen. Then we design another arithmetic problem. For any number, after two steps of calculation, it will get itself. The parameter used in the first step is K, and the parameter used in the second step is Q. Of course, these two steps are also are designed to be irreversible. In this way, a magical phenomenon occurs. For example, I have a file on hand. After encrypting the file with any number among K and Q, it can and can only be decrypted with another number, which forms the so-called asymmetric encryption. encryption. When it comes time to transfer money, we can keep K as the private key and broadcast Q as the public key. When I need to transfer a bitcoin to Zhang San, I will encrypt this sentence with my private key, and then broadcast my public key together with this sentence, so that everyone can Use my public key to decrypt the hash value, and then compare it with the original transfer information to confirm that it was indeed me who transferred the money to Zhang San.Going back to the previous question, why do digital currencies such as Bitcoin use public chains? Since the public chain currency is released, it is theoretically not affected by the centralized organization including the founding programmers, and even the final quantity of Bitcoin has an upper limit that cannot be changed artificially. So in a sense, the biggest selling point of the digital currency represented by Bitcoin is its rarity, apart from the security caused by the so-called asymmetric encryption. In other words, this type of digital currency wants to become a substitute for gold in the new era. This is necessary for private digital currencies because they need to replace state credit with technology to guarantee their monetary value. However, this does not meet the needs of a national digital currency. One of the important reasons is similar to the reason why gold was eliminated as a currency: the mining speed of gold cannot be compared with the growth rate of industrial output value in human industrial society. Using gold as a benchmark for currency issuance will cause severe deflation. Similarly, since the currency issued by the public chain is not directly linked to the real situation, if it is used as a national currency, there is a high probability of deflation. There are some other problems in the public chain: since all nodes are required to verify the transaction information, this operation may lead to the disclosure of some commercial secret information; at the same time, the distributed bookkeeping mode verified by all nodes results in only 7 transactions per second for Bitcoin. transactions, seriously affecting transaction efficiency. In addition, if there is an error in the transaction operation, the public chain is not very convenient to cancel. So our digital renminbi is not based on a public blockchain. Unlike public blockchains, private blockchains have the highest authority in the hands of private organizations or individuals. Organizations or individuals with the highest authority can freely control the circulation and quantity of private blockchain currency. The recognition of such a digital currency is very low, so the digital renminbi needs a moderate blockchain, which is the alliance-like blockchain technology. Hyperledger, the representative blockchain of the consortium, was first launched by the Linux Foundation in 2015. The goal is to “build an open source distributed ledger framework, and build powerful industry-specific applications, platforms, and hardware systems to support commercial-grade transactions.”This technology is developed based on the private blockchain, and is technically particularly moderate in the area between the private chain and the public chain. The biggest difference between the consortium chain and the public chain is that the participants of the consortium chain have a clear real identity and have certain access conditions. Taking Hyperledger as an example, it needs not only the public key to verify the identity, but also the node certificate and user certificate within the organization. If you want to implement other functions such as development, you need other certificates, and the identities of all participants are managed by real names. In order to enhance transaction efficiency, the number of nodes in the alliance chain is different from that of the public chain, and the number of nodes participating in the transaction is usually limited, ranging from dozens to hundreds. In theory, as long as it is verified by a credible node, a series of functions such as transfer and bookkeeping can be realized. This makes the computing power of the central bank’s digital currency far greater than that of the “public chain” private digital currency and even the banking system, which can process 30,000 transactions per second. We can make an analogy, as a sovereign currency under the guidance of alliance chain technology, it itself is a distributed bookkeeping function like Hyperledger. . The decentralized peer-to-peer payment shared by digital currencies is guaranteed during the transaction process without intermediaries. At the same time, as a central bank digital currency that needs to implement monetary policy, its issuance must be centralized. The central bank can even directly use the digital renminbi to directly transfer wages to the bank accounts of our migrant workers brothers. So what will the central bank’s digital currency do to promote the internationalization of the renminbi?
03

This depends on the motivations of various countries to choose RMB. So today we can classify the countries that conduct RMB settlement into different categories. What is the reason why they choose RMB settlement? I can roughly divide it into three categories here: countries that are sanctioned, countries that lack dollars and are threatened by inflation, and countries that are worried that US sanctions will damage their economic interests. The first category of countries is very typical, that is, countries that are excluded from the SWIFT system but have a large demand for trade with China. Typical examples are Iran, Russia, Venezuela, North Korea and other countries. These countries do not have a SWIFT interface, and generally have relatively good resource endowments, which can meet my country’s needs in some aspects.The second type of countries is very different from the first type of countries. This type of country has not been sanctioned by the United States, but is now subject to the impact of the dollar’s interest rate hike. If there is no U.S. dollar, domestic assets may depreciate against the U.S. dollar or even be forced to go bankrupt, and become the target of being harvested in the U.S. dollar tide. Typical of such countries are Brazil and Argentina. Since their economies are not as stable as those of developed countries, their interest rates are relatively higher to attract foreign investment. Affected by the interest rate hike of the US dollar before, in order to reduce the negative impact, it was forced to raise the interest rate. At the same time, due to the instability of this round of global supply chain due to the epidemic and war issues, and the disappearance of the low-interest dollar due to the Fed’s interest rate hike. The local currency fell against the US dollar. This leads to domestic currency inflation of the country’s own currency in the domestic market. However, developing countries like us have a large external debt burden and most of them are US dollar debts, so we urgently need US dollars to engage in a series of financial activities such as debt repayment. Therefore, it may further lead to the undervaluation of domestic high-quality assets and eventually be acquired by international capital at a low price. Therefore, countries in this category need to implement currency swaps with China. After all, the core of inflation is that funds have no material counterparts. As the largest industrial country in human history, China can meet the needs of various countries to purchase industrial products to stabilize prices. Especially in 2022, under the background of major inflation in the world’s major western countries, China and Russia, the most sanctioned country in human history, will not experience major inflation. This has given many countries certainty, almost proving that they have a good relationship with China, and hyperinflation is hard to come by now. Then it is a natural choice to choose China, which can solve the inflation problem and has the world’s second largest dollar reserves, to reduce the impact of inflation and dollar debt maturities. Representatives of the third category of countries are ASEAN countries. ASEAN and China are each other’s largest economic partners. As we all know, we have a long-cherished wish, which Americans believe may be fulfilled by 2027. Last year, the Americans showed unprecedented sanctions intensity in the Russia-Ukraine war. The result is that although Russia has not been affected, the European industrial economy is almost exhausted. The same is true for ASEAN, whose economic structure is highly tied to the Chinese market. Once we fulfill our long-cherished wish, the United States will definitely let similar sanctions go. China may not have too many problems, but ASEAN certainly can’t stand it. To avoid that from happening in the short term, ASEAN must find a way out. So the discussion on local currency settlement started. The choice of these countries represents the initial demand for RMB settlement at this stage: we need a substitute for the US dollar, and we can reduce future economic risks by looking for substitutes. To borrow a sentence from “Lord of War”, how to make the remaining eleven people also have guns. The next question of RMB internationalization is how to make the rest of the countries choose RMB? We can first summarize the source of international currency value: first, you need to use this currency to buy and sell things, and this aspect is also the biggest demand for the RMB to go to the world: you can really make money with RMB. Even the closer you get to China, the harder it may be for you to have hyperinflation. And if there is no middleman of the US dollar, the settlement will be made with the local currency and RMB, and RMB investment will be opened. Maybe these countries will be able to buy more things and at the same time may open up the export market of these countries to China. The economic cycle is alive. In the middle of the last century, the United States did this job. It was the largest industrial country and the largest single market in the world at that time. . This is also the reason why the U.S. dollar became an international currency that year. The second is that you can facilitate the trade of services and commodities. This is also the most important part of the long-term success of the dollar hegemony and SWIFT in the world. Since the Bretton Woods system, the U.S. dollar has long been used as the general equivalent of international trade in services, and the currency values ​​of most developing countries are also pegged to the U.S. dollar. The U.S. dollar is in fact the anchor for most countries to issue their own currencies. At the same time, as the international settlement system with the most extensive channels and the most stable transactions in the world, SWIFT has established the channel with the lowest transaction cost for the world’s financial and trade settlement. And this kind of commercial barrier is also the biggest obstacle for the RMB to go overseas. After all, the currency credit and settlement convenience of the US dollar are the biggest commercial moat for the hegemony of the US dollar. The third is the monetary premium that can be obtained. For example, because we can use US dollars to buy whether it is local armed forces or security provided by the US military, or we can use US dollars to buy chips, lithography machines, etc., this public product attribute can make the price of the US dollar higher than its own fair value. . Simply put, money is tighter and more valuable. But in general, the status of an international currency is determined by the value it can provide for international trade in services, so this provides a guideline for the development of RMB internationalization. Our country is the overall champion in the history of the world’s industrial development, but we are developing so fast that others still don’t trust our money and banks, and they don’t believe that our currency stability and the convenience of using RMB channels will be better than the US dollar. So how do we improve the credit and channel convenience of the currency to obtain a premium? Then let the RMB be digitized! As an incompletely decentralized sovereign currency, the digital renminbi using alliance chain technology can first use the credit of national sovereignty and credit based on blockchain technology to surpass the single sovereign credit of US dollar credit. After solving the credit problem, how to solve the convenience problem? Then only disruptive innovation can be carried out by solving the pain points of SWIFT. Remember the problem that SWIFT has been complaining about? High handling fees, slow transaction speed, etc. The digital renminbi can solve these problems. Digital currency adopts point-to-point payment technology, through the form of “local currency→domestic digital currency wallet→overseas payee digital currency wallet→foreign currency”, there is no complicated procedure for multi-bank transfer and settlement in traditional payment, so the rate charged for cross-border payment It is almost 0, which can greatly save expenses for enterprises with large-scale cross-border business transactions. At the same time, due to the adoption of the alliance chain digital currency model, the transfer only needs to be verified by a small number of nodes, and all transaction participants have passed the real-name and qualification verification. Therefore, the transfer speed can reach near real-time transfer.

This has been demonstrated in the “Multilateral Central Bank Digital Currency Bridge Research Project” (m-CBDC) jointly launched by the Digital Currency Research Institute of the People’s Bank of China, the Hong Kong Monetary Authority, the Central Bank of Thailand, and the Central Bank of the United Arab Emirates on February 24, 2021. Bridge) has been verified. According to the 2021 Bank for International Settlements report, the cross-border payment operation of the multilateral bridge project can be completed within 10 seconds. Since the cross-border fee rate is almost 0, the overall cross-border transfer can save 50% of cross-border fees. The overall benefit-to-cost ratio is extremely attractive. In 2022, during the Beijing Winter Olympics, the central bank’s digital currency will be piloted. There is a technological breakthrough here, that is, we can exchange foreign currency into central bank digital currency in real time without binding a bank card, reducing time costs. In addition, the previous digital renminbi itself can realize the payment without binding a bank card and completing the payment work without being connected to the Internet. The huge handling fee advantage and the speed advantage of 3 days versus 10 seconds are enough to convince us that the transaction convenience and high cost-efficiency ratio of the full version of the digital renminbi in the future will definitely kill SWIFT in seconds. All that remains is to use the existing advantages to impress companies and individuals in the world to participate in and use the digital renminbi. After all, SWIFT started in the 1970s and it took 40 to 50 years to develop to today. Rome wasn’t built in a day, and neither is the digital yuan.

Summary

On the whole, the United States is now doing a big favor for the renminbi, especially the digital renminbi, to go to sea. And we are also learning the logic of the dollar replacing the pound. In recent years, the U.S. has been using the U.S. dollar as a public product for private use, and using SWIFT to sanction other countries. Although this looks majestic, but in fact he is digging his own corner. When a public product becomes a tool for the interests of some small groups, why do other countries in the world have to jump into it knowing that it is a trap, and then hand over the handle to those small groups? Isn’t this giving people a handle? At the same time, this round of inflation in the United States and Western countries just proves that due to the previous unlimited quantitative easing, European and American money is no longer a stable currency anchor. After all, European and American money can buy fewer things, and SWIFT is still so expensive. So why use dollars or euros to buy things and contribute seigniorage to Europe and the United States? This is a philosophical question. Fortunately, we in China are also seizing this opportunity.We are making use of our advantages of being the largest industrial output value in human history and the world’s largest market, while advancing the demand for RMB internationalization, we are using digital RMB to make up for the lack of RMB in terms of transaction and access convenience. This set of Americans has tried, but they failed. In the end, they followed the law of market economy and chose to adopt SWIFT established by Europeans. We are also taking this path, just as SWIFT revolutionized the wire transfer rules and established the cross-border settlement rules in the new era. The promotion of cross-border services of digital renminbi is trying to change the logic of cross-border services of traditional currencies and establish new rules for cross-border settlement of sovereign currencies in the digital currency era. This attempt may or may not be successful, but in any case, this attempt is marking the arrival of a new era of currency, and it also means that the Chinese are working hard to get the currency price we deserve for our own labor. I believe that as the digital renminbi accelerates to go overseas, a fairer world is possible.