Factors that blockchain affects the macro economy

Ⅰ What impact does the development of digital currency have on macro management and economic life

The use of digital currency is rich in scenarios

“Digital currency is an unregulated, digital currency , which are usually issued and managed by developers, and are accepted and used by members of a specific virtual community.” Liu Rong, Dean of the School of Finance and Taxation, Southwestern University of Finance and Economics, introduced that digital currency has the characteristics and advantages of low transaction cost, fast transaction speed and fixed amount of currency. .

“Digital currency is mainly divided into private digital currency and legal digital currency from a global perspective.” Liu Yushu, director of the Macro Research Department of the Chongyang Institute for Financial Studies, Renmin University of China, introduced that private digital currency is divided into encrypted or non-encrypted , both centralized and decentralized. For example, Bitcoin is a decentralized encrypted virtual currency; the digital renminbi (“DC/EP” for short) developed in my country is a digital form of paper money and is a legal digital currency launched by the central bank.

The usage scenarios of digital currency are more and more abundant, and its user acceptance is growing. The use of digital currency has covered various scenarios such as shopping consumption, salary payment, transportation, travel, take-out settlement and tuition payment. Generally speaking, the number of users of digital currency is still a small part, but the number of users is growing. .

There are multiple considerations for the first batch of pilot sites

Pan Helin, Executive Dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, said in an interview with the media that Shenzhen, Chengdu, and Suzhou were selected. , Xiong’an New Area and other places to carry out digital renminbi pilots, there are many political, economic and technical considerations.

Politically, Shenzhen and Chengdu are sub-provincial cities and national central cities. Xiongan New Area is another new area of ​​national significance after Shenzhen Special Economic Zone and Shanghai Pudong New Area.

In terms of economy, these regions are important economic centers in my country, especially in terms of rapid development of the digital economy, and have the basic economic conditions for piloting the digital renminbi.

In terms of technology, Shenzhen has a mature financial technology ecosystem. Suzhou has taken the lead in developing an independent, safe and controllable blockchain underlying platform with corresponding technological maturity. Chengdu has created a domestic blockchain technology-based platform. The intellectual property pledge financing service platform, and the Xiongan New Area has formed the basic idea of ​​”digital Xiongan” construction from the very beginning, which can be said to have advanced and mature scientific and technological conditions.

Digital currency is different from Alipay

Liu Rong said that the functions and attributes of digital currency are exactly the same as those of banknotes, except that its form is digital. Central bank digital currency is a digital alternative to paper money, that is, digital currency and electronic payment tools. Considering the digital currency issued by the central bank as digital RMB cash, it is easy to understand the concept of digital currency.

Liu Rong said: “The usage scenario of digital currency is like this, as long as you and I have DC/EP digital wallets on your mobile phones, you don’t need the Internet, as long as the mobile phone has electricity, the two mobile phones touch With one touch, you can transfer the digital currency in one person’s digital wallet to another person. Digital currency does not need to be bound to any bank account when paying, unlike WeChat and Alipay, which require a bank card to be bound now.”

Liu Rong emphasized that DC/EP is digital RMB cash, which is settled by the central bank and has legal compensation. DC/EP payment is the first-level direct payment method, while Alipay and WeChat payment are a third-party payment method. Commercial banks store currency for settlement, and there may be a very small probability of bankruptcy risk, while DC/EP can be used as legal currency. Realize offline payment with higher security and quota than Alipay and WeChat payment.

Digital currency helps RMB internationalization

“Digital currency is the strategic commanding height of the global digital economy era and an important channel for RMB internationalization.” Liu Yushu believes that with the With the continuous enhancement of my country’s national strength, the central bank’s digital currency will play an important role and may become an important stable anchor for the international monetary system in the future.

First, it is conducive to the construction of a large global financial system in which finance and the real economy are harmonious and unified, and internal and external finance are harmonious and integrated. The central bank’s digital currency is digital cash, endorsed by the state’s credit, in addition to accounting, payment, stored value and other functions, it can realize the full data management of the currency life cycle. Compared with traditional currencies, with the support of big data and artificial intelligence technology, the efficiency of currency use will be further improved; the supervision of financial stability will be more timely, and the control of financial and economic crises will be more accurate.

Second, it is conducive to seizing the opportunity of the international market in the digital currency era. At present, my country’s central bank’s digital currency research and development work is in a leading position in the world. This time the central bank’s two-tier investment and two-tier operation digital currency framework system has been recognized by most countries in the world., the current pilot work is progressing rapidly. With the international integration of the digital economy, the technical and institutional advantages of DC/EP in the payment, settlement, and pricing functions in the international market will provide an effective starting point for the internationalization of RMB.

Third, it is conducive to enhancing the financial stickiness of regional cooperation. The convenience and reliability of DC/EP is conducive to the establishment of more diverse and flexible financial cooperation between my country and neighboring countries; digital RMB can promote bilateral win-win investment construction with other countries, jointly resist systemic financial risks, and enhance the vitality of regional capital markets Provide new kinetic energy.

Ⅱ What are the considerations for judging whether an industry is suitable for blockchain

Chongqing Jinwowo Network Analysis Whether the blockchain is suitable for a certain industry mainly depends on three factors:
1-Whether the blockchain can effectively improve the experience and efficiency in this field;
2-Whether the difficulty and cost of the blockchain in this field are higher than the value enhancement brought by the blockchain;
3 – Whether the processing efficiency of the blockchain can meet the actual needs of the field.

Ⅲ What is the impact of Alipay and WeChat payment on my country’s macroeconomic policies?

(1) Compared with banknotes, it can reduce operating costs. At present, the cost of issuing, returning and storing banknotes is relatively high, and digital legal currency can save most of these costs.

(2) Strengthen the central bank’s management and supervision of the monetary and financial system. On the one hand, the birth of the central bank’s digital currency will promote the innovation of the currency issuance and circulation system, and strengthen the central bank’s centralized management authority over the monetary and financial system. On the other hand, the mature version of digital currency will have programmability, which is conducive to the full name tracking, management and control of currency circulation, big data analysis, and even the precise circulation of “special funds”, which will also promote the optimization of fiscal policy in the opposite direction. and implementation.

(3) It is expected to promote RMB globalization and deepen global trade and financial cooperation. With the continuous development of the “Belt and Road”, the overseas influence of the renminbi is increasing rapidly, and the digital currency technically lowers the threshold for currency circulation. Especially for countries with underdeveloped banking systems, the digital renminbi may become a good choice. . This in turn will further promote global trade and financial cooperation.

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Traditional electronic money represented by bank electronic accounts and Alipay is a set of ledgers controlled by a third party (ie, centralized) The system relies on the support of institutions such as banks and enterprises. Since the ledger systems of each bank and each payment company are independent of each other, complex reconciliation and settlement issues are involved in cross-institutional payment.

The central bank’s digital currency is a distributed ledger system, that is, a blockchain system. It has the characteristics of point-to-point payment and transaction settlement. Theoretically, the payment efficiency is higher.

IV What exactly is the blockchain, do not introduce macroscopically

Blockchain solves the problem of ownership confirmation in the transaction process based on mathematical principles, and ensures the system’s record of value exchange activities, Transmission and storage results are credible. Once the information recorded in the blockchain is generated, it will be permanently recorded and cannot be tampered with, unless it has more than 51% of the total computing power of the entire network, it is possible to modify the newly generated block record.
Biying China, a digital currency crowdfunding platform based on blockchain technology, has emerged in China; China Post and IBM have developed an asset custody system based on blockchain technology.

Ⅳ Use the knowledge of economic life to analyze how the country should solve the problems of the blockchain

①The country implements scientific macro-control, strengthens the supervision of the blockchain market, and rectifies according to law Standardize the blockchain market order and create a good environment for the development of the blockchain; formulate and implement blockchain-related industrial policies, increase financial and financial support, and realize the connection between supply and demand. ②Strengthen the building of integrity and improve the social credit system.

Ⅵ How to understand the blockchain economy in a popular way

The principle of blockchain: a decentralized distributed accounting system
The core of blockchain technology is all The currently participating nodes jointly maintain the transaction and database, which makes the transaction based on the principle of cryptography rather than trust, so that any two parties who reach an agreement can directly carry out the payment transaction without the participation of a third party.
Technically speaking, a block is a data structure that records transactions and reflects the flow of funds in a transaction. The blocks of transactions that have been reached in the system are connected together to form a main chain, and all nodes participating in the calculation record the main chain or a part of the main chain. A block contains the following three parts: transaction information, the hash formed by the previous block, and a random number. The transaction information is the task data carried by the block, including the private keys of both parties, the number of transactions, the digital signature of the electronic currency, etc.; the hash formed by the previous block is used to connect the blocks to realize the past Sequential arrangement of transactions; random�� is the core of the transaction. All miner nodes compete to calculate the answer of the random number. The node that gets the answer the fastest generates a new block and broadcasts it to all nodes for update, thus completing a transaction.

1.1 What is blockchain

Blockchain refers to a technical solution that collectively maintains a reliable database in a decentralized and trustless manner. The technical solution mainly allows any number of nodes participating in the system to associate a series of data blocks (blocks) generated using cryptographic methods. Each data block contains all the information exchange data of the system within a certain period of time, and generates Data fingerprints are used to verify the validity of their information and to chain the next database block.
In layman’s terms, blockchain technology refers to a way for the whole people to participate in bookkeeping. Behind all systems is a database, which is a large ledger. Then who will keep the ledger becomes very important. At present, it is whose system is responsible for bookkeeping. The accounts of each bank are kept by each bank, and the book of accounts is kept by Ali. But now in the blockchain system, everyone in the system can have the opportunity to participate in bookkeeping. If there is a new transaction data change within a certain period of time, everyone in the system can do bookkeeping. The system will judge the fastest and best bookkeeper during this period, write the recorded content to the ledger, and Send the contents of the ledger during this period to all others in the system for backup. In this way, everyone in the system has a complete ledger. Therefore, the data becomes very safe. A tamperer needs to modify more than half of the system node data at the same time to truly tamper with the data. The cost of such tampering is extremely high, making it almost impossible. For example, Bitcoin has been running for more than 7 years, and countless hackers around the world have tried to attack Bitcoin, but so far there has been no transaction error. It can be considered that the Bitcoin blockchain has been proved to be a safe and reliable system.

1.2 Why there is blockchain innovation

Humans need to communicate in the process of activities, and communication is based on information. In the past, information was circulated It is not convenient enough to meet the needs of market participants for information, so intermediaries and centers are born. This centralized system has problems of high cost, low efficiency, value dispersion, “information silos” and insecure data storage. However, due to technical and environmental factors, this system continued to operate for many years until the advent of the Internet. The starting point of the first generation of the Internet is the TCP/IP protocol, which is to implement an open code for peer-to-peer transmission of information in a unified format for all nodes on the network, and to program, protocol, and implement the basic values ​​of freedom and equality required by the global unified market. Execution. The Internet has eliminated low-value and high-cost intermediate chains, and decentralization has achieved low-cost and high-efficiency in global information transmission.
However, the first generation of the Internet did not solve the problem of credibility of information. Activities that can be decentralized on the Internet must be activities that do not require credit endorsement, and activities that require credit as a guarantee must be centralized activities involving third-party intermediaries. Therefore, the Internet technology that cannot establish global credit has encountered great obstacles in its progress – people cannot participate in any value exchange activities on the Internet in a decentralized manner. To realize value exchange, people still need third-party intermediaries (such as banks, clearing, exchanges) based on credit. The global centralized credit system still has problems such as high operating costs, low efficiency, and vulnerability to attack and damage. For example, the fiat currencies of various countries have different credit values ​​and incompatible clearing systems, adding a lot of cost to global trade.
Therefore, the second generation Internet must break through: how to establish global credit in a decentralized way? Make value transfer also cost-effective and efficient. We need to create a technology in the Internet, which can also engage in value exchange activities without guaranteeing mutual trust between people, so as to achieve true decentralization and removal of third-party intermediaries, and realize the transformation from information Internet to The transformation of the Internet of Value.

1.3 Blockchain application

Bubi blockchain has been applied to equity, supply chain, points and other fields, and is conducting experiments and application tests with exchanges and banks .
As an integral application on the Bubbi blockchain, Shubeibao has been launched recently, which is a good demonstration for the application of blockchain technology in various industries.

1.4 Why the financial industry needs blockchain

Trust is the foundation of the financial industry. In order to maintain trust, the development of the financial industry has spawned a large number of high-cost, inefficient, single-point-of-failure intermediaries, including custody, third-party payments, notaries, banks, exchanges, etc. Blockchain technology uses a new encryption authentication technology and a decentralized consensus mechanism.�Maintain a complete, distributed and immutable ledger, allowing participants to ensure the security of funds and information through a unified ledger system without the need for mutual recognition and the establishment of trust relationships. This has huge implications for finance. Therefore, global financial giants are exploring the application of blockchain. On the one hand, it is to prevent the risk of being subverted, and on the other hand, it is also “for my own use” to improve efficiency and reduce costs, so as to consolidate, optimize and expand existing power.
First, blockchain can reduce trust risks. Blockchain technology has the characteristics of open source and transparency. The participants of the system can know the operating rules of the system, verify the authenticity and integrity of the content of the ledger and the history of the ledger construction, and ensure that the transaction history is reliable and has not been tampered with, which is equivalent to The accountability of the system is improved, and the trust risk of the system is reduced. For example, the blockchain can avoid the current Internet financial P2P runaway, fraud and other events.
Second, blockchain can improve the efficiency of payment, transaction and settlement. On the blockchain, the process of transaction confirmation is the process of clearing, settlement and auditing. The blockchain uses distributed accounting, all transactions are displayed in real time on a spreadsheet similar to the global sharing, and the efficiency is greatly improved. For example, the US securities settlement system is T+3, but the blockchain can improve the efficiency to the minute level, which can reduce settlement risk by 99%, thereby effectively reducing capital costs and systemic risks.
Third, blockchain can reduce operating costs. Various financial business systems and background work are often faced with long processes and multiple links. Today, whether Visa, Master, or centralized operations, currency transfers must pass through a third party, which makes cross-border transactions, currency exchange rates, internal accounting, and time costs too high, and brings risks to capital. Blockchain can simplify and automate lengthy financial service processes, reduce front-end and back-end interactions, and save a lot of manpower and material resources, which is of great significance for optimizing financial business processes and improving financial competitiveness. The Bank of Spain believes that by 2022, blockchain technology will help the financial industry reduce bookkeeping costs by $20 billion.
Fourth, the blockchain can effectively prevent failures and attacks. The traditional financial model is centered on finance such as exchanges or banks. Once the center fails or is attacked, the entire network may be paralyzed and transactions will be suspended. The blockchain is supported by many distributed nodes and computer servers on a peer-to-peer network. Any problems in any part will not affect the overall operation, and each node saves a copy of the blockchain data. Therefore, the blockchain has built-in business continuity, which has extremely high reliability and fault tolerance.
Fifth, blockchain can improve the level of automation. Since all files or assets can be embodied in the form of code or ledger, by setting up data processing programs on the blockchain, smart contracts and automated transactions are possible on the blockchain. For example, a smart contract can write a set of financial terms into the agreement, guaranteeing the automatic execution of the contract and the default payment.
Sixth, blockchain can meet regulatory and auditing requirements. The records stored on the blockchain are characterized by transparency, traceability, and immutability. Any record, once written to the blockchain, is permanently stored and cannot be tampered with. Any transaction between two parties can be tracked and queried.
In addition to the above positive effects on existing systems and business models, blockchain can also drive the birth of new business models. On the one hand, the characteristics of blockchain technology allow it to realize some business models that are difficult to achieve in a centralized model. On the other hand, blockchain greatly encourages innovation and collaboration in the whole society through the openness and collaboration of source code. Of course, there will be many problems and challenges in the financial application of blockchain, and this article also considers the specific application.

The working principle of blockchain technology is not difficult to understand. We can find that the working principle of this blockchain technology is omnipresent by focusing on the application research of specific blockchain technology.

VII The rise of blockchain, what impact will it have on future finance

August 6, 2018, Mr. Cai Yi, the financial industry consultant of Huawei, founder and CEO of Huaxuan Technology In DAGA | Blockchain & AI (core group), a special topic was shared, with the theme: the current situation and prospect of blockchain finance. The following text is organized according to the speech of the lecture and has been reviewed by the author.

Cai Yi: Financial industry consultant of Huawei, founder and CEO of Huaxuan Technology, founder of Sharing Book Club, member of China Writers Association, engaged in financial technology research for more than ten years, is a senior expert in the digital transformation of banks .

Good evening everyone, I am very happy and honored to share some thoughts with you here.

First make a brief self-introduction:My name is Cai Yi. I was a writer in my youthful years. I wrote some books, publications and novels in the 1990s, when there was no Internet. After working, he has been engaged in informatization work in the financial industry, from financial channels to data centers, from outlets to technology, witnessed the development of financial technology, and found some problems. After 2014, he worked as an investment partner. In recent years, he has also worked as a financial industry consultant at Huawei. From a cognitive level, he has been a consultant for the development of talents in the digital transformation of the financial industry.

When I came into contact with blockchain in 2015, I founded Huaxuan Technology and Shared Book Club. At present, we mainly focus on the cognition of blockchain and the implementation of financial technology solutions. At the cognitive level, interactive sharing and knowledge management are carried out in the form of book clubs. At the technical level, technologies such as blockchain, big data and AI are used to reshape the processes and scenarios of the financial industry, starting from a local perspective. Getting to know the blockchain comes from my own interest in the blockchain, and I often study and conduct research with some friends. Of course, some views are still superficial, and I hope you will share more criticism and corrections.

U.S. elite think tanks once believed that the core of maintaining global leadership is technology, technology must rely on the economy, and the core of the economy is finance. So what is the future of finance?

Today’s topic is: Current Situation and Prospects of Blockchain Finance. I would like to introduce mainly from three aspects:

  • A brief introduction to finance and the financial system;

  • The current situation of blockchain finance ;

  • Prospects for blockchain finance.

  • I. Finance and the financial system

    1The concept of finance

    First of all, let’s talk about the concept of finance. The word “finance” comes from Japan after the Meiji Restoration (1868) is somewhat related to the gold standard established by Japan in 1897. It was introduced to China from Japan in the early 20th century. It was first proposed by Minister of Finance Liang Qichao in 1902, and Zhang Zhidong raised objections at that time. Therefore, China has remained on the silver standard after the Sino-Japanese War, but this also allowed China to escape the 1929 decade of the Great Depression.

    The original meaning of finance is “money financing”, which refers to the circulation of funds in the society. Later, the meaning was expanded to represent transactions and economic activities related to currency and credit. There is actually another reason for the translation into “finance”: gold used to be the only medium in international trade, and value and wealth were based on gold. Therefore, when people make standard gold bars, they need to melt the gold into shape, which may be the original meaning of the word “finance”, that is, to melt the metal.

    Finance is the general term for currency circulation and credit activities and the economic activities associated with it.

    Let’s look at our definition of finance later: Finance is currency circulation and credit activities and related economic activities. The general term for the related economic activities. In a broad sense, finance generally refers to all economic activities related to the issuance, custody, exchange, settlement, and financing of credit currency, and even includes the purchase and sale of gold and silver. In a narrow sense, finance refers to the financing of credit currency.

    Simply speaking, the content of finance can be summarized as the issuance and withdrawal of currency, the absorption and payment of deposits, the issuance and recovery of loans, the trading of gold, silver and foreign exchange, the issuance and transfer of securities, Insurance, trust, domestic and international currency settlement, etc. To put it more bluntly, finance is a two-way feedback. The institutions engaged in financial activities mainly include banks, insurance, securities, trusts, and financial leasing. We all know this relatively well and have been in frequent contact with them. Therefore, to understand the meaning and institutions of finance, you also need to understand China’s financial system.

    2China’s financial system

    The development stage of my country’s financial system is roughly divided into five stages:

  • The initial stage, the first stage Five years (1948-1953): the establishment of the People’s Bank of China (1948), the People’s Bank at this time was far from what we imagined now. But it marked the beginning of a new Chinese system of financial institutions.

  • The “big unification” system in which the central bank unifies revenue and expenditure, the second five years (1953-1978): The People’s Bank of China is the only one in the country to handle various banking businesses A financial institution that integrates the central bank and the ordinary bank. The unification is actually a model that we copy from abroad, and I won’t say the specific country.

  • Initial reforms and breakthroughs in the “uniform” financial institution system, the third five-year period (1979-August 1983): Bank of China (established in 1912), China The Agricultural Bank (established in 1951) and China Construction Bank (established in 1954) have been restored or established one after another, but the People’s Bank of China still integrates currency issuance and credit. We have seen that after the reform and opening up, China’s financial industry has developed very rapidly.

  • The diversified financial institution system has begun to take shape. In ten years (September 1983 to 1993): the People’s Bank of China was formed as the core, with industrial and agricultural institutions as the core. It is a financial institution with four major professional banks as the main body, and the coexistence and division of labor of various other financial institutions.structure system. After 1987, Bank of Communications, China Merchants Bank, Shenfa, CITIC and Hengfeng appeared successively. In 1988, Ping An, Guangfa and Xingye appeared. In 1992, China Everbright, Huaxia, and Shanghai Pudong Development Co., Ltd. appeared, and the China Securities Regulatory Commission was established in the same year.

  • The stage of building and improving the social market financial institution system (from 1994 to the present): formed a “one bank and three associations” as the leading role, with large, medium and small commercial banks as the main body , A relatively complete financial institution system with a variety of non-bank financial institutions as the auxiliary wings. In 1994, three major policy banks (China Development Bank, China Export-Import Bank, and China Agricultural Development Bank) were established; in 1995, the first private commercial bank, Minsheng Bank, was established (this is of great significance); And set up the Insurance Regulatory Commission. The China Banking Regulatory Commission actually appeared relatively late, only established in 2003. From then on, the pattern of one line and three meetings was formed. However, not long ago, the China Banking Regulatory Commission and the China Insurance Regulatory Commission merged into the China Banking and Insurance Regulatory Commission. You can pay attention to it.

  • From an evolutionary perspective, normative research in finance is often linear.

    That is, we often use a certain evolutionary form as a standard (usually developed market economic systems, such as the Soviet Union, Germany, the United States and even Japan, etc.) to describe the financial system from non-market-oriented to market-oriented, from financial The progress path from inefficient allocation of resources to high-efficiency allocation, and explain the GAP of the standard form and the reasons.

    Actually, we can find from the development history of China’s financial system just now: since 1978, China’s financial system has evolved in the direction of marketization, standardization, diversification and internationalization. Both the scale and the degree of complexity are rising rapidly and non-linearly:

  • All kinds of financial institutions are showing a “networked” and “strongly connected” business format, that is, the current banking and The degree of correlation between banks, banks and other financial institutions and various financial sub-markets has increased significantly, and the credit links have become increasingly close, intertwined and intricate.

  • There have also been some significant changes in the ecological environment of the financial industry. On the one hand, traditional formal financial institutions seek to accelerate transformation and innovation, and strive to seize opportunities in innovations such as business strategy, market positioning, management structure, business format, and products. On the other hand, various emerging financial institutions have emerged in large numbers.

  • The financial industry also presents new features such as real estate financialization, “banking” of non-bank institutions, and asset securitization.

  • These changes are beyond the general imagination of industry, regulators and policymakers, and will have a range of impacts:

    Positively, the size of the financial system Both the financial and the composition have expanded, the business expansion and financial service capabilities of financial institutions have been improved, the financial market has been developed, and innovative payment has developed rapidly. This is the case with fintech, which we will talk about later.

    In a popular saying, there are all kinds of birds in the forest. Then, the negative aspects are mainly reflected in the following aspects:

  • The interaction between the financial system and the real economy tends to be complex, and the role of the financial system in generating and amplifying asset bubbles is underestimated.

  • The reticulation and strong connection of the financial system have widened the gap between the financial industry and financial supervision and weakened the effectiveness of traditional supervision. my country’s current financial supervision system has only been in operation for more than ten years.

  • The path and mechanism of monetary policy transmission through the financial system have changed (the transmission chain of monetary policy has been elongated or deformed, and the transmission and effectiveness have decreased), and the regulation has become proactive and effective. Sex faces new constraints. The current monetary policy framework has been continuously improved in response to economic and financial market developments since its establishment in 1996, but the complexity of the financial system in recent years has brought new challenges to it. Broad money M2 was also impacted by financial deepening, electronic payment and other factors, and was further weakened by the shadow banking system.

  • Various cross-market, cross-business, and cross-border behaviors that evade supervision interweave various risk factors, such as: capital pool operations with serious mismatches in terms of terms and products are relatively hidden. Large liquidity risks, product nesting leading to risk transfer, insufficient shadow banking supervision, local debt, real estate, and external shocks have all brought great challenges to the stability of the financial system.

  • There is no harm without comparison, and my country’s financial system as a whole is still relatively backward. This lag is mainly reflected in the lag in bank innovation: the People’s Bank of China announced in October 2015 that it would cancel the “interest spread protection”, while the United States had completely marketized interest rates as early as April 1986, and China was nearly 30 years late.

    3The institutional framework and basic problems of China’s financial system

    Of course, my country’s current financial system is built on three basic institutional frameworks:

  • One is relying on the commercial trust existing in the legal provisions, that is, policy orientation;

  • The other is that the third party acts as a credit intermediary to guarantee the realization of asset transfer transactions;

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  • Three is set byThe Chinese-style clearing institution is the center to process the completed transaction settlement and clearing.

  • Based on this, four problems are also derived:

  • 1) The problem of integrity system and trust mechanism. Traditional finance must have strict transaction records to accumulate credit. Without transaction records, it is difficult to achieve financing or loans, because there is no technical means to ensure the safety of transactions between both parties.

  • 2) The transaction settlement time is longer. The traditional financial transaction time has been accelerated, but the settlement time is still relatively long, especially for cross-border transactions, which often cannot be reached immediately.

  • 3) The cost of intermediary services is high. An important source of income for the traditional financial transaction system is the collection of transaction fees or loan interest; in cross-border transactions, the cost caused by exchange rate changes must be paid.

  • 4) Poor security. There are many human involvement in traditional finance, which means that the probability of human errors and omissions is also higher.

  • Faced with this series of problems, financial institutions have been looking for solutions. When we communicated with ICBC and China Merchants Bank two years ago, they were already exploring big data, artificial intelligence and blockchain. And its sense of crisis is very strong.

    4 Fintech

    As the positive aspects just mentioned, financial institutions have been seeking solutions to financial informatization and financial digitization.

    So, let me mention what’s going on with fintech. Whether it is FinTech proposed by JD.com or TechFin proposed by Ant Financial, I think it is essentially a better combination of technology and finance, just like how we will discuss how to better integrate finance and blockchain.

    Era of Fintech 1.0

    At this stage, the financial industry and the technology industry exist side by side. change. Since the Second World War, the rapid development of communication technology and information technology has made finance break national borders, and the cross-border investment of financial institutions has also greatly accelerated. The providers of financial services in this era are mainly banks.

    Era of Fintech 2.0

    Technology is promoting the globalization of finance and making financial services more and more digital. The financial industry realizes the electronic and automation of office and business through the application of traditional IT software and hardware, thereby improving business efficiency. During this period, financial institutions have greatly increased the adoption of IT technology in internal operations, and have successfully achieved paperless office in many processes. The core system, credit system, clearing system, etc. that are often discussed in banks and other institutions are the representatives of this stage.

    Era of Financial Technology 3.0

    In the stage of Internet finance, the main force of financial technology at this stage is the entrepreneurial enterprises of non-financial institutions, relying on Internet technology and information communication technology to provide financial services or Cooperate with financial institutions to launch financial services. By building an online business platform, the financial industry uses the Internet or mobile terminal channels to gather a large number of users and information, and realize the interconnection and interoperability of any combination of the asset side, transaction side, payment side, and capital side in financial business. Changes in financial channels to achieve information sharing and business integration.

    Era of Fintech 4.0

    The financial industry has changed the traditional sources of financial information collection and risk pricing models through new IT technologies such as big data, cloud computing, artificial intelligence, and blockchain. , the investment decision-making process, and the role of credit intermediary, so it can greatly improve the efficiency of traditional finance and solve the pain points of traditional finance. The representative technologies are big data credit reporting and robo-advisory.

    Speaking of this, let me summarize a little: Finance is an intermediary of credit, and finance is a two-way feedback. We talked about China’s financial system and learned that ICBC, China Merchants Bank and Ping An were established at the same time, so we know why ICBC is more active and innovative than the other four banks. Then we talked about the development of financial technology, which has led to the better development of financial technology in informatization and digitalization.

Excerpt and: Article: Current Situation and Prospect of Blockchain Finance

VIII What Factors Need to Consider in Blockchain Construction

Consultation Record· Answered on 2021-09-26


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