Original title: Xu Wenping: Developing Digital Finance and Building a New Ecological Pattern - The Road to Compliance under the New Ecology of Digital Finance
economic prosperity and financial prosperity; Financial stability, economic stability. Banking, securities, and insurance are the troika of finance and an important force for promoting economic development. In the era of great changes represented by Industry 4.0, digital economy and new quality productivity, the mainland's "14th Five-Year Plan" proposes to "accelerate digital development and build a digital China", give full play to the advantages of massive data and rich application scenarios, promote the deep integration of digital technology and the real economy, empower the transformation and upgrading of traditional industries, and put forward the development strategy of strengthening the innovation and application of key digital technologies, accelerating the promotion of digital industrialization and industrial digital transformation. In the digital wave of the 21st century, the financial industry is at the forefront of change. Digital finance, with its unique innovation and penetration, has become an important engine to promote the transformation of the global economy. I would like to take this opportunity to share three preliminary understandings on how digital finance can build a new ecological development pattern.
1. Digital finance integrates with the real economy and builds a new ecological pattern
With the rise of digital finance, it has not only reshaped the concept and model of financial services, but also become a key force in promoting high-quality economic development. This kind of technology-driven financial innovation has given birth to digital industrialization, that is, the deep integration of digital technology into the financial industry to achieve efficient, intelligent and personalized services. At the same time, digital finance has also promoted the digitalization of the industry, applied financial technology to various fields of the real economy, solved the financing problems of small, medium and micro enterprises, stimulated industrial vitality, and promoted the development of the economy in a greener, smarter and inclusive direction. To promote the rapid development of digital finance, integration and innovation play a very important role, specifically there are two footholds, one is to promote industrial digitalization, which requires financial technology to deeply integrate the real economy, and the other is to accelerate digital industrialization, which requires innovation-driven finance itself.
(1) To promote industrial digitalization, it is necessary for financial technology to deeply integrate the real economy. Industrial digitalization means that we must deeply integrate digital technology into all aspects of the financial industry, and drive the efficiency, intelligence, and personalization of financial services through technological innovation. To develop digital finance, it is worth paying attention to cross-border payment and currency bridge projects. Digital finance represents technology-driven financial innovation, and it is worth mentioning the innovation of digital currency and payment systems. Whether at home or abroad, we can enjoy convenient payment services such as WeChat and Ali PAY at any time. At the same time, central banks are also launching digital currencies, and more than 110 economies are currently actively exploring the possibility of central bank digital currency CBDC. The wave of currency digitization has already taken off around the world, and the international community has shown unprecedented interest in cooperation in the field of cross-border payments. For example, the mBridge Project. Through this project, the practical application of the digital yuan has been demonstrated, which not only realizes the issuance and recycling of CBDC between participating countries, but also effectively handles the transaction process, providing a new solution for international payment and financial cooperation. At present, there has been substantial progress in the cross-border payment project. According to reports, the Saudi Central Bank issued a statement on June 5, 2024 that it will become a member of the mBridge Minimum Viable Product (MVP) platform, a landmark event that deserves close attention.
(2) To accelerate digital industrialization, innovation needs to drive financial products and services. In October 2023, the Central Financial Work Conference clearly put forward the "construction of a financial power", and it is necessary to comprehensively strengthen supervision, improve the financial system, improve financial services, prevent and resolve risks, and do a good job in five major articles: science and technology innovation finance, green finance, pension finance, inclusive finance and digital finance. Digital finance is an important support for building a financial power, and it is the core and foundation of the five major articles. Digital industrialization is to extend the tentacles of digital finance to a wider range of real economic fields, solve the problem of difficult and expensive financing for small, medium and micro enterprises through financial technology, promote the efficient allocation of resources, and stimulate industrial vitality. Emerging fields such as green finance, inclusive finance, and pension finance are important starting points under this trend. For example, through innovative tools such as green bonds and carbon financial products, we will provide financial support for sustainable development projects; With the help of digital technology, financial services can be realized, so that remote areas and vulnerable groups can also enjoy convenient financial services; Explore ageing financial products to meet the challenges brought about by the aging population.
2. Grasp the challenges and opportunities of digital finance and identify the focus of building a new ecological pattern
First of all, we need to focus on the inclusion of data assets in the table and accurately quantify the digital value of the enterprise. In the era of the data economy, data assets may account for 60%-70% of GDP. The core of the competition of intelligent AI large models lies in data, and the mainland is sitting on a huge raw data and a vast market, which is a priceless treasure. The conflict between raw and generated data in the future will highlight the rarity of data sources, just like land and intellectual property, which have great potential for appraised value and promising value-added prospects. Therefore, the inclusion of data assets in the table is not only a recognition of the value of data, but also an institutional arrangement for data governance, protection and utilization. In the context of the digital economy, traditional balance sheets often fail to accurately reflect the actual value and competitiveness of enterprises because they do not fully incorporate data assets. As a core factor of production, data plays an increasingly significant role in value creation, but it is not reflected in the financial statements, resulting in distorted corporate valuations. As a result, the inclusion of data assets has become a key move to reshape the corporate valuation framework. At the end of 2023, the mainland established a national data bureau. With the continuous improvement of relevant policies and standards, such as the promulgation of the Interim Provisions on the Accounting Treatment of Enterprise Data Resources, there is clearer guidance on the assessment, confirmation and measurement of data assets, laying the foundation for the formal recording and reporting of enterprise data assets. In practice, the enterprise confirms the ownership of the data assets and reasonably valus them, and the lawyer issues a legal opinion to identify the data resources of the enterprise as intangible assets and reflect them in the balance sheet. This not only helps to increase the transparency of the company's assets, but also provides a more accurate measure of the company's market potential and long-term growth capabilities.
Secondly, we should focus on risk prevention and control, and continue to improve the intelligence and emergency response capabilities of financial supervision. Building a new line of defense for digital financial securityIn the context of the vigorous development of digital finance, a core issue has surfaced: how to fundamentally solve the problem of asset authenticity and ensure the healthy development of the market by strengthening the application of RegTech. In the past, the frequent crisis of trust in P2P lending and private equity funds was rooted in the opacity and fiction of the asset base, highlighting the urgency of building a strict regulatory system. Drawing on international success stories, RegTech is gradually becoming a key line of defense against digital financial risks. Powered by cutting-edge technology and sophisticated data analytics, this technology helps regulators and financial institutions accurately identify, assess risks and take effective management measures. It is expected that the multi-dimensional application of RegTech – including real-time monitoring and early warning, intelligent compliance processes, automated reporting and auditing, high-tech anti-fraud and anti-money laundering mechanisms, and blockchain technology to enhance transparency and traceability – will not only build an impregnable anti-counterfeiting wall for the market, but also improve emergency response capabilities and effectively block corruption and money laundering channels through innovative means such as sandbox supervision. In particular, RegTech has installed a "safety valve" for the digital financial market by optimizing regulatory processes, improving risk insights, and promoting a compliance culture in the industry, ensuring the stability and safety of the market. In short, attaching importance to and deepening the application of RegTech is not only a necessary move to cope with the current challenges, but also a strategic choice to lead the sustainable development of digital finance in the future, and inject stronger confidence and impetus into the global financial market. With the further implementation of RegTech in China, it marks our move towards a more transparent and secure digital financial era.
3. Prediction of the new ecological pattern of digital finance in the future
(1) Unbounded finance. For example, the use of cryptocurrencies such as Bitcoin is undoubtedly a huge impact on traditional finance, but at the same time, digital finance will achieve more personalized and instant financial services, and the boundaries of financial services will be infinitely expanded, and users can enjoy efficient and convenient financial services regardless of geographical location.
(2) Deep integration of finance and technology. FinTech will continue to innovate, and technologies such as blockchain, artificial intelligence, and cloud computing will play a greater role in intelligent decision-making, risk control, asset management, insurance customization, and other fields, and promote the iterative upgrading of financial products and services. For example, the use of intelligent monitoring systems, automated compliance processes, and regulatory technology can effectively improve the accuracy and response speed of reviews through the construction of intelligent systems, which not only reduces human error, but also improves business processing efficiency. Although digital finance is also rooted in the deep integration of finance and technology, the significant difference between the two is that the former emphasizes the use of advanced traceability and traceability technology to effectively curb the breeding of credit risk and moral hazard. The application of this technology has made digital finance an important step forward in ensuring transparency and security, and has built a more robust and reliable financial ecosystem compared to the regulatory blind spots faced by the P2P field.
(3) Deep integration of digital finance and the real economy. The deep integration of digital finance with manufacturing, the Internet, energy, and environmental protection is reshaping the industrial ecology. Through the industrial Internet platform, the manufacturing industry has achieved intelligent and green transformation and improved production efficiency and sustainability. Internet technology accelerates the flow of information and promotes supply chain collaboration. The energy industry uses digital finance to promote the intelligence of energy management systems and help green energy conservation. The environmental protection industry strengthens environmental monitoring and resource optimization through integrated applications to drive the circular economy. This convergence trend not only promotes industrial upgrading, but also accelerates the process of green economic transformation and high-quality development. Focusing on the practice of digital finance in the green ecology and the "dual carbon" goal, the EU Battery Act has introduced innovative measures, emphasizing the use of blockchain technology to give batteries a unique "smart ID card". This identity tag runs through the entire life cycle of the battery from production to disposal, ensuring traceability and traceability throughout the whole process, thus deepening the integration of digital finance and the real economy, and providing a strong guarantee for sustainable development.
(4) Digital finance is closely integrated with inclusive and ESG investment and financing. For example, regional commercial banks use digital financial technology to provide accurate services for small customers, small and micro enterprises, and low-income people, and lower the threshold for financial services through algorithms and big data analysis, so as to improve the accessibility and inclusiveness of financial services. On September 25, 2015, the 193 member states of the United Nations formally adopted the 17 Sustainable Development Goals (SDGs) at the summit. The Sustainable Development Goals (SDGs) aim to shift to a sustainable development path from 2015 to 2030 by addressing the social, economic and environmental dimensions of development in an integrated manner. China's digital finance adopts ESG standards, promotes internationalization along the Belt and Road Initiative, drives global green and sustainable development, and demonstrates financial innovation and responsibility.
Finance is like a long stream of water, silently nourishing every corner of the economy. With the help of digital technology, compliance development has broadened the path to financial inclusion and spawned a prosperous green economy. In the face of the global gap between the rich and the poor and development challenges, digital finance is becoming an important force to promote balanced development and demonstrate the care of science and technology.
China's development path, from agricultural economy to Industry 4.0, shows the spirit of independence and self-improvement. We continue to overcome crises, overcome poverty, and move towards common prosperity. Just as Tsinghua University's motto is "unremitting self-improvement, virtue carries things", the tenacity and wisdom of the Chinese nation shine brightly in the long river of history.
On the journey of the new era, building a digital financial ecosystem is our new mission. We should take the world as our own responsibility and follow the concept of a community with a shared future for mankind to create peace and prosperity. "Goodness is like water", and water benefits all things without fighting, which is exactly the spiritual portrayal of the digital finance era. Let us hope for the future with 32 words: "The king of the world, swallowing the mountains and rivers, the spring breeze and rain, and enjoying the peace; Dragon Teng Kyushu, phoenix singing eight wilderness, the moon is white and the wind is clear, and we will create brilliance together", and we hope that the era of digital finance will bring peace and prosperity to the world.
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