China’s Digital Fiat Currency, Namely the “e-CNY” Will Bring About A New Era of Digital Fortune
The development process of China’s digital yuan has witnessed two rounds of accelerations in 2017 and 2019. Around National Day in 2020, the first public beta trial of digital yuan at retail level was conducted in Shenzhen. On the afternoon of July 16, 2021, the People’s Bank of China disclosed its digital yuan operation model for the first time. China’s digital fiat currency is now designated as “e-CNY” in accordance with international practice.
The “e-CNY” needs to be systematically constructed. This means huge business opportunities. The large-scale investment and deployment from commercial banks in this field will also bring about huge transformational business. China’s leading layout in the field of blockchain and digital currency has made many technical elites foresee the future business opportunities. This means it might lead to more commercial applications of related technologies.
Financial Cloud Service Providers Will Have to Make Adjustments to Meet New Filing Requirements
Recently, a reporter from Caijing exclusively learned that the People’s Bank of China issued a first draft on the “Financial Cloud Service Filing Management Measures”. Although the plan may go through further adjustments, the overall direction has been determined. Indeed, no institution or individual shall engage in or provide financial cloud services in disguise without filing. At the same time, financial institutions must not use financial cloud products that have not been filed.
According to current regulations, common cloud service providers such as Alibaba, Tencent, Baidu, and JD.com that involve IaaS services will be required to apply for filings if they want to continue providing cloud services for financial institutions in the future. But at the moment, there will not yet be a cloud service provider that will meet the filing requirements. Some of the above-mentioned institutions have made corresponding adjustments in accordance with the filing requirements. Yet it is still unknown who will be the first to get the “admission ticket”.
Geoffrey Okamoto: It Is Important to Encourage Innovation Rather Than Over-Regulation.
On March 12, 2020, Geoffrey Okamoto was appointed as the first deputy managing director of the International Monetary Fund. On that day, the global stock market recorded its biggest one-day decline since Black Monday in 1987 due to the outbreak of the Covid-19 epidemic. In an interview with a reporter from Caijing on July 28, 2021, Okamoto called on countries to shift their policies from economic assistance to reforms to boost the prospects for recovery. Okamoto is one of the few decision makers in the world who can talk about financial technology from wider and smarter perspectives.
In Okamoto’s view, our reliance on technology has reduced the impact of the pandemic. From ordering food online to holding virtual meetings, this is not only due to technological innovation, but also to the practical application of these technologies in our society. Okamoto pointed out that the virus has accelerated people’s cultural changes. For government departments, it is important to encourage innovation, so as to obtain benign benefits and promote growth, rather than over-regulation.
Online Transformation Will Be A Challenging Project for Local Small and Medium Banks
Under the impacts of the pandemic, 2021 will be a critical year for the digital transformation of China’s local small and medium banks. Many of the large banks have achieved drastic increases in production during this process. Meanwhile, some small and medium banks have strayed in the wrong direction of digital transformation.
In recent years, large and medium-sized banks have gradually acquired digital advantages. Since 2020, the regulators have strengthened the requirements for operations of small and medium-sized banks and have blocked their development plan of expanding service areas through the Internet. In addition, the Covid-19 crisis has put pressure on local small and medium-sized banks. It has also forced them to fill up their digital shortcomings and participate in this mandatory digital and online transformation. But obviously, the digital transformation is not an easy task.