Digital Currencies and Relevant Policy Analysis

Abstract

The paper collates the relations of digital currencies with the past forms of currencies, studies the operating mechanism of digital currencies, analyzes the influence of digital currencies on the financial order and economic pattern, and probes into how to drive the reform of global monetary system with pragmatic and innovative efforts. The paper highlights: First, the evolution and development of currency reflects the mankind’s social and economic development level. Second, digital currency born with the advances of technology does not change the content of credit money. The credit money-to-digital currency shift must respect the operating mechanism of money and ensure that the physical market and the money market are balanced or roughly balanced. Third, with a complicated influence on the social economy, digital currency is unlikely to change the global monetary system and the international economic pattern easily. Fourth, the work of encouraging financial innovation and improving overall financial infrastructure should come with strengthened efforts to develop sound rules governing the market order in the context of digital economy, by guarding against the risks from “excessive monopoly” and “decentralization”. Fifth, the paper calls for linking “trust, confidence and credit” of the human society organically with such intrinsic values as global development, global planning and global resources, and also leveraging such values to actively approach the “Earth-based” monetary system and its replacement of the “gold standard”, the “silver standard” and the sovereign credit based monetary system which have been in long use.