Issuance method / procedure of Asian digital common currency and issues to be examined

11 mins read

Introduction

This paper discusses the issuance procedure and issues to be examined regarding the Asian Digital Common Currency (ADCC / AMRO Coin), based on the comments received. After giving an overview of ADCC / AMRO coins below, Provision of assets (government bonds) from each country / economy central bank / currency authority to an international institution (for example, AMRO), From an international institution to each country’s central bank, etc. We will discuss the provision of Asian common currency (ACU) -denominated bonds to the issuance of Asian digital common currency (ADCC / AMRO coins) by the central banks of each country, exemplifying some specific cases. After that, as issues to be examined, basket currency, ensuring versatility, ensuring anonymity, anti-counterfeiting, AML / CFT, ensuring liquidity, cross-border information management, and digital currency We will discuss distribution networks, impact on monetary policy, legal development, infectious disease prevention, etc.

 

Overview of ADCC / AMRO coin 7 What is

Asian digital common currency (ADCC / AMRO coin)? Digital currency (ADCC / AMRO coin) of the currency unit (for example, ACU) common to each country / economy in Asia (ASEAN + 3).) Is issued in a form that coexists with each existing currency. ADCC / AMRO coins, like conventional banknotes and coins, have specifications called “token type” and “general use type” that are distributed in the market, and are “contactless IC chips (for example, NFC 8 chips)”. The ADCC / AMRO coin is stored in an IC card or smartphone with a built-in IC card, and payment and settlement are made by transferring the monetary value between users. ” Currently, it is a “value storage type” like electronic money that is widely used and other countries / economies. In addition, ADCC / AMRO coin is safer than conventional electronic money, such as acquiring “transaction history” by block chain technology (combination of PKI’s private key and public key) and preventing unauthorized use. It has the characteristic of being expensive.

 

Procedure

FOR issuing ADCC / AMRO coins First, before issuing ADCC / AMRO coins, it is necessary to issue bonds denominated in basket currency ACU. Specifically, government bonds (in some cases, national currencies) are provided by ASEAN + 3 countries / economies, and international organizations (for example, AMRO) issue ACU bonds using them as resources. The central bank (or government agency) of each country / economy purchases and holds this ACU bond. Central banks of each country / economy is in case of issuance of ADCC / AMRO coin, backed by holdings of the ACU bonds 9.

 

Provision of assets from ASEAN + 3 countries / economy

First, an international organization (for example, AMRO) receives government bonds, etc. from ASEAN + 3 countries / economy in order to issue ADCC / AMRO coins. The following method can be considered as an idea.

For example, in the case of Thailand, an international organization (for example, AMRO) opens abound account at TSD 11 which is CSD 10 in Thailand and receives Thai government bonds from the central bank of Thailand (or the Thai government). In the case, an international organization (for example, AMRO) opens an account with the BOJ-NET JGBs and receives JGBs. Therefore, international organizations (e.g. AMRO) will need to open a bond account as a participant in the national / economy government bond arbitration system. In addition, when receiving in each country / economy currency, it is necessary to open a checking account as a participant of the RTGS 12 system of each country / economy. These probabilities may vary depending on the country / economy situation, but if difficult, an international institution (e.g. AMRO) will open an account with a major financial institution (direct participant) in each country / economy., Participating in Real Time Gross (CSD) and / or Real Time Gross (RTGS) in each country / economy as an indirect participant. By the way, Chart 2 shows the list of ASEAN + 3 RTGS and JGB CSD systems.

 

Issuance of ACU bonds When an

International organization (for example, AMRO) issues ACU bonds using distributed ledger technology (DLT 15), there are several possible methods. Here, we consider two cases:

(1) when using existing CSDs for corporate bonds in each country / economy,

(2) an international organization (for example, AMRO) issues block chain ACU bonds.

For the calculation of the rate of basket currency ACU with each country / economy currency (LCY), for example, it is conceivable to use AMU 17 etc. which is calculated and provided daily by institutions such as the Research Institute of Economy, Trade and Industry (RIETI 16). Regarding the issued ACU bonds, “how much can the central bank (or government) of each country / economy buy?” And “how much can the dollar-denominated country buy?” It will be discussed at (for example, AMRO). Regarding the issuance of ACU bonds, there are several options, such as using existing FMI 19 (CSD and RTGS), connecting them, and issuing privately-placed bonds using DLT. In the future, it is necessary to investigate and examine the feasibility, advantages and disadvantages of each method, and proceed with discussions.

 

Issuance of

ADCC / AMRO coins backed by ACU bonds The issuance of ADCC / AMRO coins will be handled by the central banks of each country / economy, and international organizations (e.g. AMRO) will be independent administrative agencies in the case, for example. -It is assumed that it will function in a role similar to that of the National Printing Bureau. However, the possibility that international organizations (e.g. AMRO) themselves will issue ADCC / AMRO coins is not denied.

Next, if the central bank of each country / economy issues ADCC / AMRO coins, the ADCC / AMRO coins will be recorded on the debt side of the central bank’s balance sheet. If the issued ADCC / AMRO coin is withdrawn by a participating financial institution of the central bank, the current account of the financial institution will be withdrawn accordingly. In this case, since the central banks of each country / economy are not the “lender of last resort” of ACU, it seems appropriate to limit the issuance of ADCC / AMRO coins to the ACU bonds held. Is done.

Contactless IC chips built into mobile wallets and electronic wallets used in the city, which are necessary for the distribution of ADCC / AMRO coins, are procured by the government of the country / economy, and the information to be stored is also printed. It is conceivable to distribute from an international organization (for example, AMRO) as a station function.

By the way, banknotes are basically issued by the central bank in ASEAN + 3 and major countries / economies, but coins are issued by the government, and the central bank puts the necessary amount into the assets of the balance sheet. There are also some countries that count on the side. However, in this case, even if it is called a “coin”, it is assumed that it will be issued by the central bank of each country / economy. Chart 4 shows the current status of ASEAN + 3 and some countries / economies regarding the issuance destinations of banknotes and coins.

 

Conclusion

Currently in the central banks of the world proceed to consider the central bank digital currency. Trial experiments have also begun in some countries. East Asia is no exception. The People’s Bank of China, the central Bank of China, has already begun proof-of-concept tests and is the world leader in this field. Specific studies are also underway in Cambodia and South Korea. In Japan as well, the Bank has been conducting joint research with the central banks of Europe, but at the request of the government, a specialized team was formed and full-scale examination began. These individual movements should be welcomed toward the realization of digital currencies, but as digitalization progresses on a global scale in addition to economic globalization, it goes beyond the framework and perspective of a single country and is digital. There should be a move toward the realization of a regional common currency and a global common currency. Especially in East Asia, although there is a temporary stagnation due to Covid19, trade and industrial integration has progressed in the last half century. On the other hand, financial integration has been delayed, and the provision of financial services in response to economic integration has continued to be inadequate. If the Asian common currency is issued digitally under the development of digital technology, transaction costs will be significantly reduced. In addition, if a common currency becomes widespread in various financial services, the convenience of finance will increase and it will become a driving force for financial integration. Therefore, it can be said that discussing regional digital currencies circulating in the region is one of the most important issues for countries / economies in the ASEAN + 3 region. Therefore, it is desirable that regional forums such as EMEAP, AMRO, ADB, and AIIB, and international organizations establish “organizations to consider and frameworks for discussion” on such issues.

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