原创 2016-01-30 季天鹤央行观察

季天鹤

2016年1月20日，人民银行发布了一个公告，称中国人民银行数字货币研讨会在北京召开，人民银行行长周小川出席会议，并称从2014年起就成立了一个人民银行数字货币研究团队。上述公告对于很多人而言或许非常遥远，看上去也十分孤立和突兀，甚至让人怀疑是不是在搞噱头。但是在我看来，这件事情并不遥远，绝不突兀，绝非作秀。这和前一段央行的离岸银行同业准备金一样，都标志着人行在货币理论和银行理论方面有了全新的认识。

过去人行的观点

其实就在2014年4月，周行在那一年的博鳌亚洲论坛回应了关于取缔比特币的提问。他说：“比特币本来也不是央行启动的，也不是央行批准的一个币，我们也谈不上什么取缔。现在我们主要担忧的是什么呢？就是这个比特币像是一种能够交易的资产，不太像支付货币，所以他不太像是一个，比如过去有人集邮，上面也写着价钱，但是他主要是收藏品，作为资产来作为交易，并不是支付性的货币，所以应该说不属于我们有没有一个什么取缔的问题。”

和上述观点一致的乃是人行2014年春天在《中国金融》杂志上的两篇文章《虚拟货币本质上不是货币——以比特币为例》和《货币非国家化理念与比特币的乌托邦》，认为国家信用是现代货币发行的基础，没有国家信用支撑，比特币难以作为本位币履行交换媒介职能。和这一观点相对应的，乃是关于余额宝是不是货币的讨论。

很有意思的是，部分人行人士认为余额宝是货币，应该纳入货币量统计，而事实上大家也确实用余额宝份额买东西。这其实就带来了一个问题：余额宝没有国家信用支撑，为什么人们愿意拿它买东西呢？推而广之，很多国外银行并不是国家所有的银行，也并没有国家信用支撑，为什么他们的存款也可以用来买东西呢？可见国家信用不是货币的必要条件。

对货币的理解

事实上，那个时候的人行对于货币的理解，存在一定的局限，特别是没有意识到，货币本身不是一种客观决定，而是主观选择的结果。马克思时代的“金银天然不是货币，但货币天然是金银”的表述，反映了他那个时代以及之前很多年里面人们对金银的主观选择。金银具有诸多好处，所以大家选择了它。货币毕竟是人在使用，人的投票至关重要，其他所有因素都是在争取每个人的主观意愿。

这种投票，在马克思之前的时代，首先表现为“劣币驱逐良币”，即不足值的硬币在市场上流通，足值的硬币被收藏起来或者被运出国外，因为收藏动机驱使的本国人以及接受硬币的外国人所看重的，不是硬币面值所标注的含金量克数，而是硬币真正的含金量。反而在流通中，含金量越少的硬币，越容易被人们花出去。

在马克思生活的时代，这种投票，表现为硬币与银行存款/银行券的争夺。在英国爆发了通货学派与银行学派的大辩论，而在美国则产生了杰克逊运动这种超硬货币主张。在那个时代，硬币无疑是货币，但纸币的前身也就是银行券，以及银行存款和支票转帐等，都在挑战硬币的地位，而最后当然获得了成功，现在的硬币都不是按照含金量在流通了，它和纸币一样都只是用来呈现“一元”等标识的介质。

而反观中国近代的货币史，我们会发现，非常多种货币在中国流通，有着林林总总的兑换率，人们使用哪个货币买东西，取决于在某个特定环境下人们的选择。当社会只有纸币的时候，人们无从选择。但当社会有了很多种兑换媒介的时候，人们有了选择，主观偏好就开始起作用了，这也是为什么银行存款被余额宝替代，但又没有全被替代的原因，因为不同的人有不同的选择。

如何挑战旧货币并上位

古往今来，挑战旧货币并上位，在理论上和实践上都有且仅有两种模式。一种是货币是所有人的资产，突出的表现就是黄金、白银、烟头、贝壳等实物货币。这些货币一旦获得了人们的共识，在交换中能够换到东西，那么就可以行使货币的职能，尽管在历史上黄金和白银履行得最好，但烟头和贝壳只是不够好而已。

在这个模式下，新金属和旧金属对货币地位的争夺，在很长的时间里未必有结果。比如黄金和白银在欧洲争夺，白银和铜在中国争夺，在很多地区都有多种金属作为货币流通，几种金属间的兑换比率不停变化，产量和生产技术也不停变化，主观需求也不断变化。偶尔由于官方比例和兑换承诺，人们在套利中还会把复本位制变成事实上的单一本位。

而另一种模式下，货币是一些人的资产却是另一些人的负债。货币能够兑换商品，那么本身对于拿出来兑换商品的人来说必定是一种资产，因此货币不可能是只是所有人的负债。但这并不意味着货币对于所有人都是资产。一种最简单的情况，就是金匠接收到黄金之后开具的保管条。这张条对于金匠来说就是负债，对于黄金寄存者而言当然是资产，可以像用黄金兑换商品一样，用保管条兑换商品。

久而久之，保管条的流通性越来越好，而且由于金匠承诺见条就兑付黄金，因此保管条虽然只是一张纸，但他却按照黄金的价值来换取商品，而不是按照一张纸的价值来换取商品。纸币成为货币的途径就是这样，银行存款也是如此。他们成为货币的途径，不是像黄金和白银在流通中不断竞争，而是通过“随时兑付”这一取巧的途径，得以与其可以兑换的金属并列流通。

而由于部分准备金这一秘密武器，银行可以一手创造负债货币用来买东西，一手用储户存过来的黄金白银买东西，负债增加资产减少，承担风险的自然是准备金率。所以这里留下一个思考题，即库存现金和银行在央行的准备金该不该被刨除在货币量统计之外？银行能不能用库存现金买盒饭？目前M2是不包含库存现金的，M0是指的“流通中货币”，但我对于这一口径有一些疑问。

公开剧情：央行数字货币大战比特币

目前的情况，正如我在《央行发钞：印传单还是打白条？》一文中提到的，是一种模棱两可的状态。纸币作为货币，在形式上处于央行的负债侧，但却并不能随时以固定兑换比例换取央行资产侧任何东西，反而更像是在央行资产侧的某种传单，只不过这种传单不是作为纸在兑换商品，而是以货币的角色在兑换。

银行存款之所以也被看作货币，乃是因为银行存款可以兑换纸币。在《人民币汇率分析的基本问题-外汇、外汇存款、外汇储备》中，我提到了银行存款这一负债的特殊性，很大程度上都来源于其与纸币的可兑换。但仅仅可兑换是不够的，如果银行存款不能够流通起来，不能很方便地转帐，那么银行存款就还不是货币，只是货币的提取权，或者说准货币。当然，中国M2口径下把活期定期储蓄存款都当作准货币，这显然是由于M2口径确定的那个时候，储蓄存款基本不用来转帐。当时的人行肯定想不到十几年后支付领域会是今天这个模样。

而对于比特币来说，它可以选择像黄金白银互相厮杀那样和现有的货币体系竞争，也可以选择成为现有货币的兑换券，等一统天下后再把这个货币扔掉或者说实现浮动兑换，这其实就是余额宝所选择的道路。等市场主体全都使用余额宝余额进行交易，而不再频繁地在余额宝和银行存款间转入转出，那么到那个时候，余额宝的1份额说不定可以不兑换1人民币，而产生一种和人民币的汇价。对于更仔细的讨论，欢迎参考《央行支付新规：力阻支付机构变身银行》。

目前来看，比特币更有可能以黄金白银争夺本位的方式和人民币进行争夺，而不是通过纸币代替黄金并取代黄金、存款代替纸币并取代纸币、余额宝代替存款并取代存款的方式来争夺，毕竟比特币打算直接在世界层面流行，自己其实已经主动放弃了钉住某个现有货币。在这个情况下，人行的数字货币，乃是与比特币直接竞争的一种方式。当然，最后的胜负，取决于哪个货币能更好地满足人们的需要。

这里稍微提到一个技术细节，即前述的纸币代替黄金、存款代替纸币和余额宝代替存款中，纸币目前完全取代了黄金，即黄金和纸币的兑换率是浮动的，黄金也推出了货币流通。但存款代替纸币这一进程，只是在流通或者说使用上代替，但存款和纸币的兑换率还是1比1，余额宝也是同理。使用上的替代和货币地位上的替代，还不完全一样。

央行似乎开始意识到自己其实面临着竞争。如果自己不搞数字货币，那么大批的程序员们会自己搞出来数字货币，而且只要有人用那么它就是货币，不需要央行发行任何许可证，正如余额宝的货币地位也不是央行赋予的一样，他自己也不用说自己是货币，它已经是事实上的货币，承不承认是别人的事，放不放到货币量口径里是央行的事，但其实际具备的角色已经无容置疑。

十年前这个讨论的焦点是腾迅的Q币，这个东西现在还存在，但它由于无法双向和人民币自由兑换，加上在那个时候线下支付手段还不普及，Q币无法像余额宝余额一样用来买菜，因此Q币最终并没有对现有人民币体系构成挑战，无法双向兑换和没有苹果手机一起让Q币胎死腹中。但我们看到，Q币和现实的人民币是存在黑市汇率的。

与其等待比特币帮助更多的俄罗斯高频交易员把钱弄到国外，还不如自己利用现有的优势参加到数字货币的争夺战里。参战还真未必输，正如中资银行并未被外资银行击垮一样，但不参战恐怕就是把地盘拱手让人了。人行当然知道，即使是邮票，在货币的漫长历史上，也在特定历史时期里充当过货币。

人行的隐藏剧情：从银行收回货币发行权

不过如果只把人行发行数字货币看成是挑战其他数字货币比如比特币，那么对人行这一操作的理解只完成了一半，即人行在公告里说的“法定数字货币与私人发行数字货币的关系”这一部分。而另一个重头戏，则是人行所说的“提升央行对货币供给和货币流通的控制力”。如何理解人行的这个表述呢？

如果我们观察上世纪的人行研究报告以及中国货币方面的研究作品，我们会特别注意到“投放货币”这个表述，也会意识到纸币的重要性。纸币是人行在形式上的负债，是人行以外所有机构的资产，是人行可以直接控制规模的货币量组成部分。相比之下，银行存款全都是银行负债，其规模很大程度上取决于银行操作，人行只能通过准备金等方式非常间接地进行调控，也就需要研究所谓的“传导机制”。

人行对于货币供应量的失控，根源在于它自己发行的纸币太不方便了。社会主体广泛选择使用银行存款这种形式，纸币占货币总量的比重越来越少，而银行负债侧存款占货币总量的比重越来越多。现在，人行意识到，如果自己能掌握的货币还是纸张形式的话，那么不但无法战胜银行存款，连余额宝都要把纸币比下去。仅仅出生不到三年的余额宝，其6000亿的规模已经是纸币的10%。

人行想要搞的数字货币，相当于给社会上每个人和机构都直接在央行负债侧开一个存款户，只不过这个存款户只能转帐而不能从央行兑换任何东西，如同纸币持有者不能从央行兑换任何东西一样，这个存款户也只是形式上的负债。人行不会倒闭，存款保险可以不用交了。此外，人行可以直接调节上述存款的利息，这一下子就突破了纸币无法带息的局限，并且把银行和非银行提升到相同的在央行有户的地位。

人行数字货币的实现，对整个银行体系的影响方式，将是和刚刚过去的1月流动性紧张一样，即纸币提取+财政存款缴存。财政是一个很特殊的在央行负债侧有存款的机构，这其实相当于财政提前使用上了数字货币。而社会公众没有财政这样的特殊待遇，他们和央行之间只能通过纸币联系。人行数字货币的实现，将伴随着人们直接把纸币交给人行，以及人们把在银行的存款交给人行。这都意味着银行在央行准备金的巨大流失。

如果人们放弃持有银行存款而持有央行数字货币，数额超过了银行在央行的全部准备金，那么这个时候人行要给银行非常大的再贷款。例如现在，银行在央行的存款在30万亿元，而公众在银行的存款在130万亿。那么，央行首先要给银行100万亿元再贷款，使银行在央行的存款达到130万亿，然后公众在银行的130万亿存款全部变成了央行负债，而银行的100万亿存款负债全都被上述央行再贷款替换，同时30万亿在央行存款和30万存款负债一起消失。

在那个时候银行存款有没有希望维持货币地位呢？如果银行提供更高利息，更好服务等等，那么银行存款还有可能是货币，正如今天余额宝和银行存款并存一样。人们选用哪个东西作为货币，是一个非常非常涉及主观体验的东西。那么多人选择把钱放在余额宝里而不是银行里面，其背后乃是每个人对提升主观体验的要求。未来，人们将面临央行数字货币、银行存款货币、余额宝份额币乃至更多种货币的竞争，新一幕货币的供给侧改革大戏就此上演。

如果余额宝和银行存款全被人行数字货币取代，那时银行体系的情况，我已经在早先的《如果存准机构扩围，货币信贷将会怎样？》中给出，即“银行负债将全部债券化，商业银行全部国开行化，存款保险基金变成发行银行债CDS的机构，央行的利率意图直接作用于储户存款以及银行债券收益率；原先央行-银行-企业个人的层级结构被打破，发展成央行-银行、银行-企业个人、企业个人-央行的三角结构。”

在货币供给上，央行将重新回到独立提供货币供给的时代，现实将和教科书上货币供给一根直线的模型更加类似。在货币政策上，央行将直接对接社会所有货币使用主体，直接满足货币需求而不是通过银行满足，央行救股市等措施不会同时影响银行负债侧和央行负债侧，而是直接单纯的央行负债侧。

小结

人行在数字货币问题上的转变，以及银发[2016]11号文对参加行准备金缴存的非传统方式，说明人行在货币和银行问题上，已经全面抛弃了虚拟货币不是货币、要求吸收余额宝存款的银行缴准备金等观点，并从非常深刻的层次上，意识到了主观意愿和主观选择在货币中的地位，以及如何仔细辨别不同层次的准备金和准备金约束。这一转变对中国金融的影响，将非常深远，利率汇率研究界必须高度关注。

On January 20, 2016, the People's Bank of China issued an announcement stating that a seminar on People's Bank of China digital currency was held in Beijing. Zhou Xiaochuan, the Governor of the People's Bank of China, attended the meeting and mentioned that a research team for People's Bank of China digital currency had been established since 2014. For many people, this announcement might have seemed distant, isolated, and abrupt, perhaps even raising suspicions of gimmickry. However, in my view, this matter is not distant at all, not abrupt, and definitely not a show. Just like the previous offshore interbank reserve requirement policy of the central bank, it signifies that the People's Bank of China has gained a new understanding in the realms of monetary and banking theory.

Past Views of the People's Bank of China

In fact, as early as April 2014, Zhou Xiaochuan responded to questions about the ban on Bitcoin at the Boao Forum for Asia in that year. He said, "Bitcoin was not originally initiated by the central bank, nor was it approved by the central bank as a currency. So we can't really talk about banning it. What are we mainly concerned about now? It's that Bitcoin is more like a tradable asset, not so much like a payment currency. So, for example, in the past, people collected stamps, which had prices written on them, but they were mainly collectibles, used as assets for trading, not as a payment currency. So, it should be said that it's not a question of whether we want to ban it."

In line with the above view, there were also two articles published in the spring of 2014 in the "China Finance" magazine, titled "Virtual Currency is Essentially Not Currency—Using Bitcoin as an Example" and "The Concept of Decentralized Currency and the Utopia of Bitcoin." These articles argued that the foundation of modern currency issuance lies in national credit, and without the support of national credit, Bitcoin would find it difficult to function as a medium of exchange. Correspondingly, discussions emerged about whether Yu'EBao (a money market fund) was a form of currency.

Interestingly, some individuals within the People's Bank of China considered Yu'EBao to be a form of currency and believed it should be included in monetary statistics, as people indeed used Yu'EBao shares to make purchases. This posed a question: why would people be willing to use Yu'EBao to make purchases, even though it lacks the backing of national credit? This led to a broader question: many foreign banks are not state-owned and lack national credit support, yet their deposits are still used for transactions. This suggests that national credit is not an essential condition for currency.

Understanding Currency

At that time, the People's Bank of China had a certain limitation in its understanding of currency. It didn't fully grasp that currency itself is not an objective determination but rather the result of subjective choice. The saying from the era of Karl Marx, "Gold and silver are not by nature money, but money is by its nature gold and silver," reflects the subjective choices people made regarding gold and silver during that time and the years before. Gold and silver had various benefits, which is why people chose them. After all, currency is something people use, and people's votes are crucial; all other factors are about competing for individual subjective preferences.

This voting process was manifested before Marx's time as "bad money drives out good money," meaning that less valuable coins were circulated in the market while more valuable coins were hoarded or sent abroad. This occurred because individuals, both from the home country motivated by hoarding and from foreign countries accepting the coins, valued not the face value of the coins in terms of their gold content, but rather their actual gold content. Conversely, in circulation, coins with less gold content were more easily spent.

In Marx's era, this voting process took the form of the battle between hard currency (coins) and bank deposits/banknotes. In the UK, there was a great debate between the currency school and the banking school, while in the US, the Jacksonian movement advocated for a super-hard currency stance. During that time, coins were undoubtedly considered currency, but banknotes, which were the precursor to paper money, along with bank deposits and check transfers, challenged the status of coins. Ultimately, these new forms of money succeeded. Present-day coins no longer circulate based on their gold content; just like paper money, they are used as a medium to represent denominations like "one yuan."

In contrast, examining China's modern monetary history, we can observe a wide variety of currencies circulating with various exchange rates. People used different forms of currency to make purchases depending on specific circumstances. When society had only paper money, people had no choice. But when society had multiple forms of exchange media, people gained choices, and subjective preferences started to play a role. This is why bank deposits were replaced by Yu'EBao, but not completely, as different people had different choices.

Challenging Old Currency and Rising to Dominance

Throughout history, there have been only two modes for challenging and rising to dominance over old currency, both theoretically and practically. One is when currency is everyone's asset, evident through tangible forms of money like gold, silver, cigarettes, shells, and other commodities that serve as money. Once these commodities gain consensus and can be exchanged for goods, they can serve as currency. In this model, new metals compete with old metals for currency status over a prolonged period. For instance, gold and silver competed in Europe, silver and copper competed in China, and various metals were used as currency in many regions. Exchange rates among these metals kept changing due to varying production levels, production technologies, and subjective demands. Occasionally, due to official ratios and exchange commitments, people turned the bimetallic standard into a de facto monometallic standard through arbitrage.

The other model involves currency being an asset for some but a liability for others. Currency can be exchanged for goods, which makes it an asset for those using it to exchange for goods. However, this doesn't mean currency is an asset for everyone. A simple example is the receipt issued by a goldsmith upon receiving gold. This receipt is a liability for the goldsmith and an asset for the depositor. Similarly, paper money's precursor, banknotes, as well as bank deposits and check transfers, challenged the status of coins and banknotes, eventually succeeding. They became means of currency exchange not through competitive circulation, like gold and silver, but by providing the convenient "convertibility on demand" route and thus circulated alongside metals.

Because of the secret weapon of fractional reserve banking, banks could create liability money to buy things and use the gold and silver deposited by customers to make purchases. As liabilities increased and assets decreased, banks carried the risk, determined by the reserve ratio. This leads to a question: should cash in bank reserves and the central bank's reserves be excluded from money supply statistics? Can banks buy lunch with cash in reserves? Currently, M2 does not include cash in reserves, and M0 refers to "currency in circulation." However, I have some doubts about this methodology.

Open Plot: Central Bank Digital Currency vs. Bitcoin

The current situation, as I mentioned in the article "Central Bank Issuance: Printing Flyers or Writing IOUs?", is a state of ambiguity. Paper money, as a form of currency, is on the liability side of the central bank in terms of its form, but it cannot be exchanged for anything on the asset side of the central bank at a fixed exchange ratio at any time. Instead, it is more like a kind of pamphlet on the asset side of the central bank. This pamphlet is not used as paper to exchange for goods, but it serves as a role in currency exchange.

The reason why bank deposits are also considered as currency is because bank deposits can be exchanged for paper money. In the article "Basic Issues in RMB Exchange Rate Analysis - Foreign Exchange, Foreign Exchange Deposits, Foreign Exchange Reserves," I mentioned the special nature of bank deposits as liabilities, which largely stems from their convertibility with paper money. However, convertibility alone is not enough. If bank deposits cannot circulate and transfer conveniently, then they are not currency; they are only the right to extract currency, or quasi-currency. Of course, under the M2 calculation in China, both current and time deposits are treated as quasi-currency. This is obviously because at the time when the M2 calculation was determined, savings deposits were not used for transfers. The central bank at that time could not have anticipated that the payment sector would evolve into what it is today.

As for Bitcoin, it can choose to compete with existing currency systems like gold and silver or become an exchange voucher for existing currencies, only to be discarded after achieving universal dominance or realizing floating exchange rates. This is the path that Yu'EBao has chosen. When all market participants use Yu'EBao balances for transactions and no longer frequently transfer between Yu'EBao and bank deposits, then at that time, one unit of Yu'EBao might not be exchangeable for one unit of RMB, giving rise to an exchange rate between Yu'EBao and RMB. For a more detailed discussion, refer to "New Payment Regulations by the Central Bank: Preventing Payment Institutions from Becoming Banks".

At present, Bitcoin is more likely to compete with RMB in the manner of a gold standard, rather than replacing gold with paper money and replacing paper money with bank deposits, and replacing bank deposits with Yu'EBao. After all, Bitcoin intends to gain global popularity directly and has already voluntarily given up pegging to any existing currency. In this situation, the central bank's digital currency represents a way to directly compete with Bitcoin. Of course, the ultimate outcome depends on which currency can better meet people's needs.

Here, I briefly mention a technical detail: in the aforementioned process of replacing gold with paper money, replacing paper money with bank deposits, and replacing bank deposits with Yu'EBao, paper money has completely replaced gold. The exchange rate between gold and paper money is floating, and gold has also entered circulation as currency. However, the process of replacing paper money with bank deposits only involves the substitution in circulation or use, while the exchange rate between bank deposits and paper money remains 1:1, the same applies to Yu'EBao. The substitution in usage and the substitution in currency status are not entirely the same.

The central bank seems to have realized that it is actually facing competition. If it doesn't issue a digital currency, a large number of programmers will create their own digital currencies, and as long as someone uses it, it becomes currency; there is no need for the central bank to issue any licenses. Just like Yu'EBao's currency status is not granted by the central bank, it doesn't need to declare itself as currency; it already functions as currency in practice. Whether to acknowledge this is up to others, and whether to include it in the monetary quantity calculation is the central bank's decision, but its actual role is beyond doubt.

A decade ago, the focus of this discussion was on Tencent's Q coins. These still exist today, but due to their inability to be freely exchanged for RMB in both directions and the limited prevalence of offline payment methods at that time, Q coins couldn't be used to buy groceries like Yu'EBao balances can. Therefore, Q coins ultimately did not pose a challenge to the existing RMB system, and the inability to exchange both ways and the lack of an Apple phone rendered Q coins stillborn. However, we see that there is a black-market exchange rate between Q coins and real RMB.

Instead of waiting for Bitcoin to help more Russian high-frequency traders move money abroad, it's better to leverage existing advantages and participate in the battle for digital currency. Joining the fight doesn't necessarily mean losing; just as Chinese banks have not been defeated by foreign banks, not participating might mean conceding territory. Of course, the central bank knows that even stamps played a role as currency in the long history of money.

The Hidden Plot of the Central Bank: Retrieving the Currency Issuance Right from Banks

However, if we only consider the issuance of the central bank's digital currency as a challenge to other digital currencies like Bitcoin, then our understanding of the central bank's operation is only half complete, namely the part that the central bank mentioned in its announcement as the "relationship between legal digital currency and privately issued digital currency". The other major aspect is what the central bank refers to as "enhancing the central bank's control over currency supply and circulation." How should we understand this statement by the central bank?

If we observe the central bank's research reports from the last century and research works on Chinese currency, we will pay particular attention to the term "currency injection" and also realize the importance of paper money. Paper money is a liability of the central bank in terms of its form, an asset of all institutions outside the central bank, and a component of the money supply that the central bank can directly control the scale of. In contrast, bank deposits are all bank liabilities, and their scale largely depends on bank operations. The central bank can only indirectly control this through measures like reserve requirements, and it necessitates studying the so-called "transmission mechanism."

The central bank's loss of control over the money supply stems from the fact that its own issued paper money is too inconvenient. Society as a whole extensively chooses to use the form of bank deposits, and the proportion of paper money in the total money supply is decreasing, while the proportion of bank liability side deposits is increasing. Now, the central bank realizes that if it can only provide currency in the form of paper, it cannot surpass bank deposits, let alone compete with Yu'EBao balances. The scale of Yu'EBao, which has been in existence for less than three years, has already reached 10% of paper money.

The central bank's digital currency that it wants to create is equivalent to opening a deposit account on the liability side of the central bank for every individual and institution in society, but this account can only be used for transfers and cannot be exchanged for anything from the central bank. Similar to paper money holders not being able to exchange for anything from the central bank, this deposit account is also merely a liability in form. The central bank will not go bankrupt, and deposit insurance may not be necessary. Additionally, the central bank can directly adjust the interest rate on the aforementioned deposits. This immediately breaks through the limitation of paper money not earning interest and elevates both banks and non-banks to the same status of having accounts at the central bank.

The implementation of the People's Bank of China's digital currency will have a similar impact on the entire banking system as the liquidity tightness experienced just this past January, namely, currency withdrawal and fiscal deposit contribution. Fiscal entities hold a unique position within the liabilities of the central bank, effectively allowing the fiscal sector to use the digital currency in advance. However, the general public does not receive such special treatment from the fiscal sector, and their interaction with the central bank remains limited to paper currency. The realization of the central bank's digital currency will coincide with people directly exchanging paper currency for the digital currency and transferring their bank deposits to the central bank. All of this implies a substantial loss of reserves for banks in terms of central bank reserves.

If people abandon holding bank deposits in favor of holding the central bank's digital currency, and the amount exceeds all of the bank's reserves at the central bank, then at that time, the central bank will have to provide banks with very large amounts of additional loans. For example, currently, banks have 30 trillion yuan in deposits at the central bank, while the public has 130 trillion yuan in bank deposits. In this case, the central bank will first need to provide banks with an additional loan of 1 trillion yuan to increase the bank's deposits at the central bank to 130 trillion yuan. Then, the public's 130 trillion yuan in bank deposits will all become liabilities of the central bank, and the bank's 1 trillion yuan in deposits will all be replaced by the aforementioned additional loans from the central bank, while the 30 trillion yuan in deposits at the central bank and the 30 trillion yuan in deposit liabilities will both disappear.

At that time, will bank deposits have any hope of maintaining their currency status? If banks offer higher interest rates, better services, and so on, then bank deposits might still function as currency, just as Yu'EBao balances coexist with bank deposits today. The choice of what people use as currency is a very, very subjective experience. So many people choose to keep their money in Yu'EBao rather than banks; behind this is each individual's demand to enhance their subjective experience. In the future, people will face competition from the central bank's digital currency, bank deposit currency, Yu'EBao share currency, and even more forms of currency. This sets the stage for a new drama of supply-side reform in currency.

If Yu'EBao and bank deposits are fully replaced by the central bank's digital currency, the impact on the banking system will be similar to what I described in an earlier article titled "If the Scope of Deposit Reserves Expands, How Will Monetary Credit Be Affected?", which is that "bank liabilities will all be securitized, commercial banks will all transform into policy banks, the deposit insurance fund will become an institution issuing bank bond CDS, the central bank's interest rate intention will directly affect depositors' deposits and bank bond yields; the original hierarchical structure of central bank-banks-enterprises-individuals will be broken, evolving into a triangular structure of central bank-banks, banks-enterprises-individuals, and enterprises-individuals-central bank."

In terms of currency supply, the central bank will return to an era of independently providing currency supply, and reality will be more similar to the textbook model of a straight line in currency supply. In terms of monetary policy, the central bank will directly connect with all currency-using entities in society, directly fulfilling currency demand rather than meeting it through banks. Measures like the central bank rescuing the stock market will not simultaneously affect bank liabilities and central bank liabilities, but will directly impact only the central bank's liability side.

In Conclusion

The central bank's shift on the issue of digital currency, as well as Circular [2016] No. 11's alternative methods for participating banks in deposit reserve requirements, shows that the central bank has completely abandoned the viewpoint that virtual currencies are not real currency and the demand for banks to absorb Yu'EBao deposits to pay reserve requirements. From a very profound level, it recognizes the role of subjective intentions and choices in currency and how to carefully differentiate between different levels of reserves and reserve constraints. This shift will have a profound impact on China's finance, and the fields of interest rates and exchange rates must pay close attention to it.