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1. my country's central bank's digital currency research and development has produced new results

On August 10, the 3rd China Finance Forty Yichun Forum was held in Yichun City, Heilongjiang Province. In this forum, Mu Changchun, deputy director of the Payment and Settlement Department of the People's Bank of China, said that the research on the central bank's digital currency (DC/EP) has been going on for five years, and now it is "ready to come out." Briefly introduce this meeting: This meeting mainly introduced the operation mode of the central bank's digital currency issuance, and there is a bright spot: the digital currency issued by my country's central bank may not use blockchain technology, nor will it rely solely on a certain The main reason for this is that the processing speed of the current blockchain technology cannot meet the actual needs. Therefore, the central bank may integrate multiple technologies to design digital currency.

Although my country is a pioneer in the research and development of the central bank's digital currency, the competition it faces is not small. Because many countries in the world have been involved in the research and development of the central bank's digital currency, the research and development of the central bank's digital currency has become a world-class "long-distance race". Even giant companies are "coveting" the "big cake" of digital currency. However, judging from the situation of Facebook's currency issuance, it is definitely unrealistic for giant companies to issue currency for daily payments. The only digital currency that can be used, circulated and recognized by law can only be the central bank's digital currency.

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2. What is the central bank digital currency?

Central bank digital currency research and development is already a trend, so what exactly is it? Compared with the current relatively mature mainstream currencies such as Bitcoin and Ethereum, what are the essential differences? In fact, countries have not yet reached a consensus on the definition of central bank digital currency. In other words, there is no uniform standard to define the definition of central bank digital currency.

However, Yao Qian, the former director of the Digital Currency Research Institute of the People's Bank of China, once discussed it in an article "The Past and Present of Digital Currency". Yao Qian mentioned: "In 2018, a report by the Bank for International Settlements (BIS) gave a more interesting definition. It used the exclusion method to define the 'central bank digital currency'. Summarize the payment tools, and then determine which ones are not central bank digital currencies, and after excluding them one by one, what remains is the central bank digital currency.”

From the current point of view, my country's central bank has not fully adopted the above two ideas. According to Mu Changchun, my country's central bank does not directly issue digital currency to the public, but adopts a "two-tier operating system", that is, the People's Bank of China first exchanges digital currency To banks or other operating institutions, and then exchanged by these institutions to the public. The central bank does not set a technical route and does not necessarily rely on the blockchain. It will fully mobilize market forces and achieve system optimization through competition. (To put it bluntly, whichever development institution can meet the needs of the central bank's digital currency in terms of technical means will be adopted.)

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3. What is the usage scenario of my country's central bank digital currency?

After introducing the operating model, let's introduce the usage scenarios of my country's central bank digital currency.

According to Mu Changchun's speech at the meeting, the design of the central bank's digital currency at this stage in my country pays more attention to the replacement of M0, rather than the replacement of M1 and M2. Here is a brief introduction to what M0, M1, and M2 mean:

M0 is the cash in circulation, which is equivalent to the cash in our hands.

M1 is equivalent to cash + bank demand deposits,

M2 is equivalent to cash + bank demand deposits + time deposits and other forms of currency with purchasing power.

my country's central bank's digital currency mainly focuses on the replacement of M0, mainly because the existing M0 is easy to forge anonymously, and there are risks such as money laundering and terrorist financing. The central bank's digital currency will design a set that can not only maintain the attributes and main features of cash, but also satisfy portability and anonymity.

The WeChat payment and Alipay payment we use now are actually based on cash, and they are not separated from bank accounts (Third-party payment companies such as WeChat and Alipay basically store user funds in bank accounts in the form of custody, so they are not separated from cash and payment. account); and the central bank’s digital currency is not based on cash and accounts. Judging from the currently known news, my country’s central bank’s digital currency can be separated from traditional bank accounts to achieve value transfer and reduce the dependence of transactions on accounts.

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4. What is the role of central bank digital currency?

For more developed countries, the central bank's digital currency can help maintain the security of the financial payment system, optimize existing financial services, and formulate and implement monetary policies more efficiently. Taking our country as an example, at present, the frequency of our use of physical cash is getting lower and lower. Most people choose third-party payment methods such as WeChat payment and Alipay payment, and the circulation of cash is greatly reduced. Relying on third-party payment methods is more convenient and fast, but there are risks such as privacy leaks and hacker attacks. Once these problems occur, they will not only threaten our personal funds, but also cause major losses to the national financial market (after all, the transaction volume is too large. big).

In addition, the central bank's digital currency can increase the influence of the central bank in the monetary field and enhance the anti-risk ability of the national currency. Especially for some countries suffering from economic sanctions and inflation, the release of the central bank's digital currency may become a kind of "Breaking Behavior". At present, people in some countries suffering from economic sanctions and inflation are more willing to exchange their assets into mainstream digital currencies such as Bitcoin, but mainstream digital currencies such as Bitcoin are relatively volatile after all. If these countries launch their own central bank digital currencies , may be able to reduce the loss of funds caused by market volatility.

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5. Does the central bank digital currency have investment value?