Technology Reshapes, But Cannot Replace, the Foundation of Trust
At a recent Digital RMB annual conference held during the Financial Street Forum, Liu Jun, President of the Industrial and Commercial Bank of China (ICBC), offered a nuanced perspective on the evolution of digital currency and the enduring nature of monetary trust. He observed that while digital technology is a powerful engine for economic development, it is simultaneously transforming the very mechanisms of trust that underpin our currency systems.
The Shift from Institutional to "Institutional + Technological" Support
Historically, trust in money rested almost entirely on institutional pillars like sovereign credit and legal frameworks. Today, that paradigm is shifting. Liu Jun noted that technological elements—data flows, sophisticated algorithms, and programmability—are now active participants in the generation and transmission of social credit. The architecture of trust is evolving from a single "institutional pillar" to a dual-engine model powered by both institutions and technology.
He was quick to establish a critical boundary, however. "The role of technology is to reinforce trust, not to replace it." No matter how advanced, technology cannot conjure credit out of thin air. It functions more as a high-efficiency network built upon the solid, immutable foundation of institutional trust.
The Ultimate Test for Digital Currency: Credit and Accountability
Addressing the buzz surrounding various digital currencies, Liu Jun proposed a fundamental criterion for evaluation: whether a digital currency can become real money is not determined by the elegance or complexity of its algorithmic design.
Three Questions More Important Than Code
The real test lies in answering three pivotal questions:
- How is its credit supported? What is its value foundation? Sovereign backing, asset collateral, or community consensus?
- How is its credit honored? Can holders reliably use it for payments and exchanges? Is its value promise widely accepted and executable?
- How is accountability enforced? Who is responsible in cases of dispute, fraud, or systemic risk? Clear liability is an indispensable component of trust.
Without robust answers to these questions, even the most technologically sophisticated proposal remains a castle in the air.
Changing Form, Unchanging Core Functions
Liu Jun further elaborated on the "change and constancy" in monetary evolution. The physical form of money is transitioning from tangible objects to data. Its settlement mechanics are also advancing, moving from asynchronous clearing reliant on bank accounts and multiple intermediaries toward instant, payment-final settlement.
Yet, the core remains unchanged. Regardless of its form, money must always perform three classic functions: serving as a medium of exchange, a store of value, and a unit of account. Any digital currency must ultimately prove itself capable of fulfilling these roles, a capability that rests, as always, on sustained and stable societal trust.
This analysis serves as a crucial reminder: in the rush to embrace technological innovation, we must not lose sight of the oldest and most valuable element in any monetary system—the deep-seated trust built upon institutions, law, and long-term commitment.