Central Bank Digital Currency: Should You Want It Too?

Over the last five months, we have researched and written about e-CNY (China’s Central Bank Digital Currency or CBDC), from its core technology and product experience, to the key institutional players involved and its long-term strategic implications. During this process, I found myself repeatedly asking this question: if you are a central bank, should you want your own e-CNY?

What felt like a more long-term question just a few weeks ago turned more immediate, in light of SWIFT “canceling” Russia, and Visa and Mastercard doing the same. Among the debit and credit cards issued in Russia, Visa and Mastercard cards accounted for 74% of payment transactions in 2020, according to the Nilson Report. In particular, Visa is often treated as the benchmark and incumbent-to-beat for both fintech startups and CBDC’s. During the Beijing Winter Olympics that just wrapped up, one headline that has been celebrated in many Chinese media outlets is this Fortune article, touting that e-CNY has unseated Visa’s monopoly on payments during an Olympic. (What’s less discussed is that Visa has signed an exclusive license with the International Olympic Committee through 2032, so its so-called “monopoly” is a contractual agreement, and e-CNY’s launch during this Beijing Winter Olympics may have violated that agreement.)

Russia’s unilateral invasion of Ukraine has shown that SWIFT, American companies like Visa and Mastercard, and the US dollar can and will be weaponized during war time. Putting down my peace-loving global citizen hat and putting on my unemotional analyst hat, it’s hard to see any central bank not wanting its own CBDC. Knowing what e-CNY is built to do and can deliver, there are three new-found superpowers that’d be hard for any central bank or financial regulator to resist, regardless of if you are a friend or foe of the US.

Superpower #1: Removing Pure Anonymity

There are only two ways of doing financial transactions that are purely anonymous: paper cash or cryptocurrency on a decentralized finance (DeFi) platform. A full-fledged CBDC can remove both forms of pure anonymity. In the e-CNY case, this is euphemistically called “managed anonymity”.

A few weeks ago, on Valentine’s Day, Mu Changchun, who leads the Digital Currency Research Institute – the internal R&D lab of the People’s Bank of China (PBOC) in charge of developing the e-CNY – invoked this “managed anonymity” notion during an event hosted by the Atlantic Council and UC San Diego. (The recording of the entire event is worth watching, if you are a CBDC nerd like me.)

Source: https://youtu.be/_K3Y8V-IhwU?t=1344

To Mu’s credit, the privacy and anonymity issue of e-CNY is something he proactively addressed. It’s a question he often gets asked in both China and the West. In a nutshell, “managed anonymity” is the “anonymous” tier of e-CNY’s wallet with these requirements and limitations:

  • Requirements: cell phone number
  • Verification: in-app
  • Account limit: 10,000 RMB (~1500 USD)
  • Single transaction limit: 2,000 RMB (~300 USD)

This tier is considered “anonymous”, because you only need a Chinese cell phone number to register. According to China’s latest data privacy laws, there is no data sharing between telcos (where you do need a real name ID to get a cell phone number) and banks. So the “anonymity” is only from the bank's perspective, and only when there is no suspicion that any financial crime is being committed by an “anonymous” wallet. If there is suspicion, the telcos of course can and will share wallet identity data with the PBOC, so financial regulators can “manage” this anonymity.

The heart of this power lies in the ease in which a CBDC enables a central bank or another financial regulatory body to crack down on financial crimes and money laundering, which is what they are supposed to do. By permanently taking away paper cash and operating a digital-only currency issuance infrastructure, tracking transactions and money flow becomes a lot easier.

There are many cryptocurrency maximalists who dislike CBDC for this power of removing pure anonymity, some going as far as calling it “one of the single greatest violations of human rights in history”. My own perspective is not so extreme, shrill, or cynical.

Technology is value neutral and its impact, positive or negative, is determined by the human beings who wield it. There will always be regulators who have the best intentions and thus deserve the best technology to do their job, and ones who abuse the power enabled by the same technology.

Superpower #2: Narrative of Financial Inclusion

Promoting financial inclusion is a common “selling point” of a CBDC. Mu touted financial inclusion as a key benefit of e-CNY in his Atlantic Council event presentation. The US Federal Reserve also mentioned financial inclusion as a potential benefit of a CBDC in its discussion paper released in January on whether the US should have its own.

Inclusion into a financial system, any financial system, goes hand in hand with losing anonymity. Being excluded has many drawbacks, but also avoids any regulation, tracking, or supervision. Thus, increasing financial inclusion and decreasing anonymity can be two sides of the same coin.

I specifically call this power the narrative of financial inclusion, because the cause of financial inclusion has been often reserved for high-minded, idealistic international non-profits or development agencies, not central banks or financial regulators. By building a CBDC, a central bank can finally be a part of this cause and a major player in this powerful, uplifting narrative – an attractive proposition to improve its public perception.

Financial inclusion is not a fake narrative, even in a wealthy country like the US. There are still roughly 7 million people who are “unbanked” as of 2019, according to a survey commissioned by the FDIC. This does not include the larger population of people who are “underbanked”, which has given rise to many fintech startups, like Chime, seeking to address this problem. If implemented with financial inclusion as a true objective, a CBDC can indeed improve access to banking services while lowering costs. Of course, it depends on the institutions and regulators doing the implementation.

In the e-CNY case, its limited pilot is deployed in ten cities plus the Winter Olympics bubble. The Olympics bubble is a special case, but the other ten cities are all fairly wealthy. Even Changsha, probably the least known city to foreigners among the ten, is the provincial capital of Hunan, not some backwater rural village in Gansu.

Source: https://www.youtube.com/watch?v=_K3Y8V-IhwU

Thus far, e-CNY’s financial inclusion implementation has fallen short, even as it continues to sing that narrative to drive its adoption and public perception. If the US Federal Reserve ever decides to build its own CBDC one day, it can do the same, even if the implementation still favors New York and LA over rural Mississippi. The same goes for any country’s central bank.

Superpower #3: Accelerating a Multipolar Financial System

Russia getting kicked out of SWIFT has made things crystal clear that USD is one of the key components of a unipolar, America-led world. While SWIFT may feel and function like an international regulator, it is actually a non-profit co-op that is technically independent. The only reason why the US can effectively use it as a sanctioning tool is because half of SWIFT’s payment flows are in USD.

Even though America’s decision to exert this power against Russia may be perfectly justified due to the unlawful nature of its invasion of Ukraine, it will also make every other economy, big or small, think twice about its reliance on the dollar and inch towards a multipolar financial system, if only so everyone has a backup plan.

Adopting a CBDC accelerates the pace towards that multipolar world. In the not too distant future, multiple CBDCs can transact via different cryptocurrency exchanges or cryptocurrencies themselves, since both CBDCs and independent cryptocurrencies, like Ethereum and others, are programmable via smart contracts. SWIFT will become irrelevant.

Stablecoin adoption presents a preview into that future. Right now, the vast majority of stablecoins issued by private tech companies are pegged to USD. But as Circle’s CEO revealed in the same Atlantic Council event where Mu discussed e-CNY, his company intends to issue stablecoins pegged to other fiat currencies later this year. Circle is one of the biggest players in the stablecoin sphere and jointly-issues the popular USD stablecoin, USDC, with Coinbase.

The Federal Reserve realizes the implication of this multipolar financial system too, where the dollar would be less powerful. In its CBDC discussion paper, “Support the Dollar’s International Role” is cited as a potential benefit, alongside financial inclusion.

So whether you want to defensively preserve your currency’s role in the international financial system (USD, Euro, Yen), or offensively grow its influence (RMB, India’s Rupee), or simply have a backup plan in case of future sanctions (Russia’s Ruble, Iran’s Rial), all roads lead to a world of CBDC’s.

The more practical question is whether a central bank will build its own or work with a private tech company, like Circle, to speed up its progress or make up for a lack of talent and expertise. This decision is similar to the “buy vs build” question that every company goes through when adopting a new technology product. This “buy” relationship has been how SWIFT does business with many developing countries, who want to be more integrated with the international financial system, but don’t have the expertise and are fine acquiescing to USD’s dominance. India’s partnership with SWIFT in 2014 is one such example.

That was then, this is now. Given the state of the world, if you are a central bank of any given country in March 2022, should you want a CBDC of your own?

It’s hard to imagine the answer is “no”.

数字货币:你也该想要吗?

在过去的五个月里,我们在《互联》上研究并撰写了一系列关于e-CNY的文章,从其核心技术产品体验,到所涉及的关键机构以及它的长期战略影响。在这个过程中,我发现自己反复地问同一个问题:如果你是某个国家的中央银行,会不会也想要自己的数字货币?

几周前可能还觉得这是个比较长远的问题,但随着SWIFT "踢开" 俄罗斯,以及Visa和Mastercard 做出同样的举动,这问题突然变得更紧迫了。根据尼尔森研究报告,在俄罗斯发行的银行卡和信用卡中,Visa和Mastercard在2020年占总支付交易量的74%。Visa尤其是被视为fintech创业公司和Central Bank Digital Currency(CBDC)的基准和竞争对手。在刚刚结束的北京冬奥会期间,许多中国媒体庆祝的一个标题就是《财富》杂志的一篇文章,说e-CNY在奥运期间推倒了Visa常年对奥运会支付的垄断(但这里没有被提到的是,Visa与国际奥委会签署了到2032年的独家合作协议,因此其所谓的 "垄断" 是协议商量好的,而e-CNY在本届北京冬奥会期间的“亮相”是否违反了该协议都还不清楚)。

俄罗斯对乌克兰的单边入侵表明,SWIFT、Visa和Mastercard等美国公司以及美元货币本身在战争期间是可以而且会被武器化的。放下我热爱和平的国际公民帽子,戴上我不带感情色彩的分析家帽子,很难想象任何国家的中央银行不想要自己的CBDC。了解了像e-CNY这种CBDC的目的和潜力,我们发现CBDC有三个新的超能力,让任何中央银行或金融监管机构都很难抵制它们的诱惑,无论你是美国的朋友还是敌人。

Superpower #1:消除纯粹的匿名性

只有两种做金融交易的方式是纯匿名的:纸币或者去分布式金融(DeFi)平台上用加密货币。一个成熟的CBDC可以消除这两种形式的纯匿名性。在e-CNY的案例中,这被委婉地称为 "可控匿名 (managed anonymity)"。

几周前的情人节,央行数字货币研究所所长穆长春在参加大西洋理事会和加州大学圣地亚哥分校举办的活动中,援引了 "可控匿名" 这个概念(如果你像我一样很喜欢研究CBDC,整个活动的视频都值得一看)。

来源: https://youtu.be/_K3Y8V-IhwU?t=1344

值得称道的是,穆长春所长主动回答了关于e-CNY在隐私和匿名方面的问题。这是一个他在国内和西方都经常被问到的问题。简而言之,"可控匿名" 就是e-CNY钱包所谓的第四类(“匿名”版),有以下要求和限制:

  • 注册要求:手机号
  • 验证方式:app内
  • 帐户限额:10,000元
  • 单笔交易限额:2000元

这一类被认为是 "匿名" 的,因为一个用户只需要手机号码来注册。根据中国最新的数据隐私法,电信公司和银行之间不存在数据共享,而要想注册一个手机号还是需要有效身份证的。因此,"匿名" 只是从银行的角度来看,而且只有在没有怀疑任何金融犯罪嫌疑的情况下。如果有怀疑,电信公司当然可以、也的确会与央行分享钱包背后与用户身份有关的数据,因此金融监管机构可以 "管控" 这种匿名性。

这种superpower的核心在于,CBDC能够使中央银行或其他金融监管机构更轻松地打击金融犯罪和洗钱。这也是这些机构应该做的。通过一款新的纯数字的货币发行基础设施,永远不再印和用纸钱,追踪某笔交易和资金流动就变得容易得多。

有许多加密货币的极端主义者不喜欢CBDC这种消除纯粹匿名的superpower,有些人甚至称其为 "历史上对人权的最大侵犯之一"。我自己的观点并不那么极端、尖锐或悲观。

科技最终是价值中立的,它的影响,无论是好的还是坏的,都是由掌握它的人决定的。总有一些监管者有好的意图,因此应该有最好的技术来完成他们的工作,也有一些人会滥用同样的技术所带来的权力。

Superpower #2:促进金融包容性的主题

促进金融包容性是CBDC的一个常见 "卖点":穆长春所长在大西洋理事会的活动演讲中,把金融包容性作为e-CNY的一个主要好处;美联储在其1月份发布的关于美国是否应该拥有自己的CBDC的讨论文件中也提到了,金融包容性是CBDC的一个潜在好处。

融入一个金融体系,任何金融体系,都与失去匿名性相辅相成。被排除在体系外有很多弊端,但也避免了任何监管、跟踪或监督。因此,增加金融包容性和减少匿名性可以说是同一个硬币的两面。

我特别把这个superpower称为促进金融包容性的主题,因为促进金融包容性往往是留给那些充满热血和理想主义的国际非营利组织或发展机构的,而不是某中央银行或金融监管机构。通过建立CBDC,中央银行终于可以作为主要参与者,成为这一令人振奋、造福广大人民的主题的一部分了 —— 这对改善其公众认知极有吸引力。

促进金融包容性这个社会问题也并不虚假,即使在美国这样的富裕国家。根据联邦存款保险公司委托的一项调查,截至2019年,美国仍有大约700万人 "没有银行账户(unbanked)"。这还不包括更多的 "缺乏银行服务(underbanked)" 人群,并催生了许多fintech创业公司,如Chime,来试图解决这个问题。如果促进金融包容性是一个真正的落实目标,CBDC确实可以降低成本,还可以同时普及金融服务给更多人。当然,这取决于负责实施的机构和监管者。

从e-CNY这个案例来看,其有限的试点被部署在十个城市加冬奥会场所。奥运会场所当然是一个特例,但被选中的十个城市都是比较富裕的。就连长沙 —— 这十个城市中对外国人来说知名度最低的城市 —— 也起码是个省会,而不是某个落后村庄。

来源: https://www.youtube.com/watch?v=_K3Y8V-IhwU

到目前为止,e-CNY对促进金融包容性的具体实施还远远不够,但仍然可以高调地“唱”促进金融包容性的主题曲。如果美联储哪天决定打造自己的CBDC,它也可以唱同样的主题曲,就算具体落实时偏向纽约和洛杉矶,而不是密西西比州的农村。任何国家的中央银行都可以如此。

Superpower #3:加速“多级”金融体系的形成

俄罗斯被踢出SWIFT一事清楚地表明,美元是美国主导的“单极”世界的关键元素之一。虽然SWIFT可能感觉上像一个国际监管机构,但它实际上是一个非营利组织,严格上说是独立的。美国之所以能用它作为制裁工具是因为SWIFT的一半支付流量都是美元

尽管美国制裁俄罗斯这一决策可能是完全合理的,因为俄罗斯对乌克兰的侵略是单方的,非法的,但此举动也使任何一个经济体,无论大小,都对其对美元的依赖三思而后行,并逐步走向“多极”金融体系的未来,为自己准备一条后路。

采用CBDC会加速实现“多极世界”的步伐。在不远的将来,多个CBDC可以通过不同的加密货币交易所或加密货币本身进行交易,因为CBDC和独立的加密货币,如以太坊和其他加密货币,都可以通过智能合约来交易。SWIFT的影响力将被消弱。

稳定币的采用就是这个未来的前身。现在,私有科技公司发行的绝大多数稳定币都与美元挂钩。但正如Circle的CEO在穆长春所长参加的同一个活动中所透露的那样,他的公司打算在今年发行与其他货币挂钩的稳定币。Circle是稳定币领域最大的玩家之一,与Coinbase联合发行了一款非常流行的美元稳定币,USDC。

美联储也意识到了这种 “多极” 金融体系的影响,在这种情况下,美元的影响力会被消弱。在其CBDC讨论文件中,"支持美元的国际角色" 也被列为潜在的好处之一,与金融包容性一样。

因此,无论你是以防守的姿态维护自己货币在国际金融体系中的影响(如美元、欧元、日元),还是进攻性地扩大影响力(人民币、印度的卢比),又或者只是为未来的金融制裁做准备,留条后路(俄罗斯的卢布、伊朗的里亚尔),条条大路都通向CBDC。

更实际的问题是,作为一家中央银行是自己打造CBDC,还是与像Circle这种科技公司合作,以加快进度或弥补自己人才和专业知识的不足。这个决策类似于每个公司在采用新技术产品之前都会思考的 "买与造" 的问题。这种 "买" 的关系一直是SWIFT与许多发展中国家开展业务的方式,这些国家希望与国际金融体系接轨,但没有专业知识,从而默许美元的主导地位。印度在2014年与SWIFT的合作就是一个例子。

那是以前,现在是现在。鉴于世界的现状,如果你在2022年3月是某个国家的中央银行,是否也会想要属于自己的CBDC?

很难想象答案会是:"不要"。

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