At a time when central banks in digital currency are in the ascendant, Algorand public chain, founded by Professor Silvio Micali, a Turing Prize winner and a pioneer in cryptography, will be selected as the blockchain infrastructure for the Marshall Islands and China to issue the world's first central bank digital legal tender in 2020, and will continue to show the elegance of "FutureFi finance" in digital currency.
On July 12, the research team of Argelander released the annual report "Using digital currency, the central bank of digital currency", and continuously studied the CBDC progress of central banks around the world in the past year, and proposed a CBDC hybrid model based on the example of public blockchain in the two-tier retail system.
In this mode, the central bank completely controls CBDC, and licensed service providers (LSP) such as commercial banks, remittance service providers and other financial technology companies can promote distribution and transactions. Compared with traditional systems, blockchain-based retail CBDC also promotes wider financial inclusion, especially for those who may have difficulty opening traditional bank accounts in the informal economy. Generally speaking, compared with the traditional centralized digital currency, this design is expected to help the central bank realize the scale operation of CBDC more simply and economically.
Argelander's research team published the research report on CBDC for the first time in 20021year. A new section has been added to this report, focusing on the benefits of CBDC and the main role of central banks in the wider digital age. The report defines four key trends in the digital age, including the growing digital economy, asset tokenization as a new business model, the growing demand for alternative currency forms and decentralized finance as a new financial system. These trends directly challenge a key task of the central bank: ensuring price stability. Use cases of public blockchain, such as the model proposed in this report, will help the central bank to continue to perform its duties in the digital age.
This report was written by several outstanding economists and researchers. Among them, Dr. Andrea Civili graduated from Princeton University, focusing on monetary policy transmission and inflation modeling. Currently, she is an associate professor of economics and a senior economist at Wharton School of Business, University of Arkansas.
Dr. Co-Pierre Georg is an associate professor at the University of Cape Town, South Africa, chairman of the Financial Stability Research Group of the Reserve Bank of South Africa (the Bank of South Africa), and a member of the Economic Advisory Committee of the Argelander Foundation. He received his doctorate from the University of Jena, Germany, and visited MIT, Princeton University, Oxford University and Columbia University successively.
Pietro Grassano, Director of European Business Solutions of Argelander Company, has worked in J. P Morgan for more than 65,438+05 years, and has held leading positions in its branches in France, Italy, Greece and other European countries. Previously, he worked in BNP Paribas Asset Management and Andersen Consulting. Naveed Ihsanullah is the engineering research director of Algorand, focusing on distributed systems and having more than 20 years of experience in the field of next-generation application security software.
In addition to the introduction and conclusion, the main contents of the other six parts of the report are: 1, the benefits of digital currency, the central bank: emphasizing four main trends in the digital age, which challenges the central bank and inspires it to issue CBDC. 2. Designing efficient CBDC: Based on the experience of various CBDC projects, the principles of designing efficient central bank digital currency are summarized. 3. Economic consideration of issuing CBDC: Discuss the economic impact of issuing CBDC, from balance sheet and financial stability to the effect of monetary policy. 4.algrand Agreement: An overview of algrand Agreement, including the design principles and a high-level overview of the agreement itself. 5. Using Argelander to issue retail CBDC: The method of issuing retail CBDC in Argelander includes relevant design considerations and a detailed introduction to Argelander's network support use case. 6. Using Argelander to issue Wholesale CBDC: the design method and related use cases of Argelander Wholesale CBDC.
Consultant Argelander emphasized that CBDC is the lifeline of commercial banks.
After the appearance of CBDC, there are still some differences from an international perspective. Commercial banks in some countries even regard the digital legal tender that the central bank may issue as an existential threat.
Dr. Co-Pierre Georg, an associate professor at the University of Cape Town and an economic adviser to the Argelander Foundation, is one of the main authors of the research report "digital currency Issuing the Central Bank with Argelander". In a recent interview with the media, he said: "Commercial banks really should not regard digital fiat as a threat" and "digital currency, the central bank, is providing a lifeline for commercial banks."
Regarding the situation that large technology companies are increasingly involved in banking services, Georg, who is currently the chairman of the Financial Stability Research Group of the Reserve Bank of South Africa, believes: "Commercial banks have indeed regressed, and they will be afraid of technology giants."
Just as the central bank regards a stable currency linked to legal tender based on blockchain as a potential threat to the regulatory economy, commercial banks also realize that if Libra of Facebook survives, "as we know, it will be the end of the banking industry," Georg said. "It will be an entity without financial supervision, with 2.3 billion customers and cash exceeding the market value of Bank of JPMorgan Chase. Including American banks, how to compete with them? They can't do it. "
Georg believes that the problem is that commercial banks operate in walled gardens. "They make products, but not infrastructure," he said. "Commercial banks should thank the central bank for providing a lifeline for public infrastructure. They can all get together and compete. What is important is that they can compete with technology companies. "
"When you talk to many participants in the market, they see CBDC as a product that can be sold to the central bank," Georg said. "This is not the right way. If you make products, you will only have Facebook in the end. If you do infrastructure, you will eventually have the Internet. "
This means that you can enjoy the information like the early Internet developers. Georg claims that it took about 30 years for the Internet field to formulate the standards of network interactivity. At the same time, he also believes that CBDC has the need for interoperability from the beginning, and there are too many things that can be done.
Combined with Argelander's research, Georg suggested that CBDC in some countries can have multiple account books and an agreement, which is not necessarily divided into inter-bank wholesale CBDC and consumer-oriented retail CBDC.
"You can have a retail ledger with higher participation costs, but it provides you with a smart contract; You can also have a retail ledger without smart contracts but with very high transactions per second, "Georg said. "As a central bank, you can operate both at the same time."
As for the blockchain, Georg said that an unnecessary struggle is that some people in the banking industry regard CBDC, which is headquartered in the blockchain, as a competitor of the real-time settlement system.
"The existing payment system works well," he said, and it is cheap and reliable. "As far as I know, it has never failed." However, the real-time settlement system does not "promote some new innovations we see from private encrypted assets that need decentralized general ledger", such as the tokenization of physical or digital assets. In view of the amazing growth of cryptocurrency, this field obviously has potential.
"If you can introduce it into public infrastructure, assuming that it is well supervised and maintained by credible institutions, then this new infrastructure can support the new business model at the core of the digital economy. I think this is why the blockchain was selected, "he said. "You need a distributed ledger to ensure that no one in this system can copy data. The secret superpower of blockchain is that it makes data unique. "
In terms of potential, he pointed out that "the last iteration of the payment system appeared in the 1960s and 1970s, when digital payment was introduced." Because of the support of technology, "blockchain can really promote new business models."
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