Riding the wind of rebirth

“Let me report on this,” Zhou Zhi said. “This idea originated from the concept of ‘forum currency’ on the Clover Forum.”

"Initially, forum coins were obtained through rewards such as posting on the forum, and could then be used on the forum. They first appeared to be used for both online and offline communication on music forums. To promote the development of the forum, Clover Forum introduced a subsidy system, which meant that if you used forum coins to download songs, the forum would pay the copyright holder a corresponding amount as a reward."

"This is the first time that there has been a real 'exchange rate' between the forum currency and the RMB."

"This method then became popular on the forum. Users could convert their money into forum currency by listening to music, watching animations, and recharging in games. This currency could then be used in other parts of the forum for payment and exchange functions such as tipping and exchanging virtual assets."

"This is actually similar to an electronic wallet, which is used to store electronic virtual currency exchanged for real currency, so that it can be exchanged in special occasions."

"Its characteristic is that it is backed by the credit of the four-leaf clover. If the group has problems, the security of forum user accounts may also be affected. Moreover, it will be difficult to use without the Internet. In addition, if it is clearing funds with a third party, there will be a delay in arrival. Although there are no service fees and withdrawal fees at present, these problems may also arise in the future when the system is improved and professional 'e-merchants' appear, just like the famous e-commerce platform Amazon."

"In any case, this is a prototype of electronic payment, and from the results of our use, it is quite good," Zhou Zhi said. "Therefore, when the Indian brother pointed out that there is a lack of financial mutual assistance channels between Hong Kong Island and the mainland, and even if there are, it is difficult to avoid the supervision of international forces, I felt that building an electronic currency exchange platform through the Internet might be the solution."

"But it would be best if the government took the lead in this matter, so that there would be a possibility of upgrading the current consumer payment channels into currency settlement channels."

"First of all, the digital yuan itself should be legal tender issued by the central bank. It is mainly positioned as a cash payment instrument M0 and will coexist with physical yuan for a long time. Both the digital yuan and physical yuan are liabilities of the central bank to the public and have the same legal status and economic value. Therefore, like physical yuan, it has the basic functions of money such as a measure of value, a medium of exchange, and a store of value, and is also legal tender."

"It can be understood as a form of RMB issued in digital form, except that it does not require plate making or printing, but the issuance and circulation management mechanism is the same as that of physical RMB, except that the value transfer can only be realized in digital form."

"Depending on the user and purpose, we can divide digital currencies into two categories. One is wholesale central bank digital currency, which is mainly issued to institutional entities such as commercial banks and is mostly used for large-value settlements. The other is retail central bank digital currency, similar to Clover Forum Coin, which is issued to the public and used for daily transactions."

This is also something that Zhou Zhi felt deeply sorry for in his previous life. The issuance of digital currency lagged behind corporate payments, resulting in a huge loss of resources and causing many management and even social problems such as the leakage of customer privacy, financial supervision, and unfair terms.

If the government had introduced digital currency earlier and confined the online payment methods of other e-commerce companies to the "wallet" category, the chaos in electronic payments that existed in later generations would have been easily resolved, and many problems could have been avoided because of a unified national legal digital payment method.

This will also generate enormous "new productivity." For example, major banks and e-commerce portals have protective measures for their customers' behavior, making it difficult to avoid illegal means of spying and extortion. If a digital currency channel existed earlier, all customers' e-commerce activities would be included in a unified digital currency platform system for supervision. The People's Bank of China would manage these resources and regularly and legally release data mining reports to all e-commerce portals and financial institutions. This would bring immeasurable benefits in creating a fair e-commerce environment, discovering high-quality resources, guiding industry direction, strengthening financial supervision, and protecting customer privacy.

It can be said that China's e-commerce will be given wings to take off.

"The digital yuan should be centrally managed and operated in a two-tier system. The right to issue it belongs to the state, and the People's Bank of China is at the center of its operating system. It is responsible for issuing it to commercial banks, which are designated operating institutions, and managing it throughout its entire life cycle. However, at the beginning, we should define it as an urgent currency for large-value settlements, and then gradually expand it to the public's daily retail payment process as e-commerce expands."

"The digital yuan will be issued in parallel with the physical yuan, and the People's Bank of China will jointly collect statistics, conduct collaborative analysis, and manage them in a unified manner. International experience shows that the diversification of settlement methods, especially international settlement, will be a basic characteristic and inherent need of mature economies. We should plan ahead, or even plan ahead of time, in order to break through traditional barriers and achieve a leapfrog development in the upcoming 'electronic settlement era'."

"The digital yuan will be prioritized as a settlement-type central bank digital currency, mainly used to meet domestic electronic settlement needs, as well as electronic settlement needs with Hong Kong and Macao. Commercial banks and licensed non-bank payment institutions can participate in the digital yuan payment service system and give full play to the role of existing payment and other infrastructure to provide digital fund settlement services to customers, provided that they fully and continuously comply with anti-money laundering, counter-terrorism financing and other compliance requirements and risk supervision requirements, and are recognized and supported by the central bank."

"In this system, the digital yuan and the electronic account funds of designated operating institutions are universal and together constitute a cash-like settlement tool."

"In this way, it is possible to conveniently implement interbank functions such as lending, settlement, and clearing, reduce settlement costs, and meet the financial needs under the digital economy with reliable, stable, fast, efficient, continuously innovative, and open competitive new financial means, support the future development of China's digital economy, build our own electronic currency 'circle', and make a trial for the next step of 'currency internationalization'."

"Currency internationalization is a natural market selection process. The international status of a currency is fundamentally determined by economic fundamentals and factors such as the depth, efficiency, and openness of the monetary and financial markets."

"In accordance with the needs of the international community, the People's Bank of China should have explored cross-border payment pilot programs on the premise of respecting the monetary sovereignty of both parties and complying with laws and regulations. It should have followed the three principles of 'no loss,' 'compliance,' and 'interoperability,' established a legal digital currency exchange arrangement and regulatory cooperation mechanism with relevant monetary authorities and central banks, and adhered to the two-tier operation, risk-based management requirements, and modular design principles to meet the regulatory and compliance requirements of various countries."

"To establish such a relationship with other currencies requires arduous and protracted negotiations, and it will be difficult for us to find a relatively equal partner to implement this measure."

"However, the existence of the Hong Kong dollar and the Australian dollar provides us with an excellent opportunity for experimentation!" (End of Chapter)