PANews reported on November 2 that Lu Lei, Deputy Governor of the People's Bank of China, stated in the preface of the 'Monetary Theory' that if central banks can issue currency without any limits, then currency is likely to be replaced by other general equivalents—such as the currently fluctuating digital assets and stablecoins. Will this really happen? As someone who has worked in research at the central bank for a long time, my instinctive thought is that the urgent issue facing major developed economies is 'to save the central bank from the hands of central bankers.' Although this idea is by no means the current central bank digital currency (CBDC), as I believe CBDC has no institutional implications for changing the increment of money, is there a digital currency that can overcome the impacts of various digital assets, achieve the effects of stablecoins, and maintain the existence of sovereign currency (solving the problem of monetary unity but fiscal decentralization in the Euro)?
The increasing expense of specific assets (such as digital assets) leads them to turn against themselves, lacking the liquidity necessary to serve as a general equivalent (i.e., they are collected rather than circulated, which is the fate of precious metals exiting from currency).
In the field of monetary economics' predictions and practices, two individuals are highly respected—Robert Mundell, who has just passed away, and Satoshi Nakamoto, whose identity is still unknown. The former adhered to the idea that exchange costs are redundant and experienced the practice of the single currency area theory in the Eurozone, but achieving the utopia of dollarization has been difficult. The latter has watched as the Bitcoin he created has evolved into an extremely expensive digital asset; currently, the energy consumed worldwide each year to mine the last 2 million coins is enough for over a hundred million people to use for more than a year. According to the marginal cost pricing method, as Bitcoin approaches the nature of an asset, it moves further away from being a widely circulated currency. So, what might the world currency (or world currency system) look like in the digital age?
Currently, digital assets are following the old path of the gold standard, and the concept of stablecoins is nothing more than a real proposal of the 'soft version' of the optimal currency area theory. Our ideas are not necessarily more brilliant than the White Plan of 1945. It is merely that in the digital age, old wine is relabeled.