guide

On April 3, 2020, the central bank stated that it will strengthen the top-level design, unswervingly promote the research and development of the legal digital currency (DC/EP), and systematically promote the reform of the cash issuance and withdrawal system.

Summary

text

secondary title

1. DC/EP may lead the wave of central bank digital currency

On April 3, 2020, the central bank's 2020 national currency gold and silver and security work video conference was held in Beijing. The central bank stated that it will strengthen the top-level design, unswervingly promote the research and development of DC/EP, and systematically promote the reform of the cash issuance and withdrawal system.

1.1 What is CBDC

On June 18, 2019, Facebook released the white paper of Libra, a global encrypted digital token. The white paper mentioned that "Libra's mission is to build a simple, borderless currency and financial infrastructure for billions of people. , opening up new opportunities for financial services innovation.”

Libra poses a threat to national currency sovereignty, and there are also credit risks. Libra is anchored by the legal tender of multiple countries, and what it wants to achieve is a global payment system to achieve fast cross-border transfers, which seriously threatens the monetary sovereignty of various countries. In addition, although Libra has a huge number of potential users, it is essentially a derivative of the legal currency of various countries, lacks the endorsement of national sovereign credit, and has credit risks.

1.3 DC/EP enters the fast lane

Since 2014, under the advocacy of then-governor Zhou Xiaochuan, the People’s Bank of China has started the research and development of CBDC.

On March 9, 2018, at the press conference of the First Session of the Thirteenth National People's Congress, Zhou Xiaochuan mentioned that the central bank is studying DC/EP, DC, digital currency, is digital currency; EP, electronic payment, is electronic payment.

In August 2019, the central bank proposed to accelerate the pace of DC/EP research and development in the second half of 2019 work video conference; in September 2019, according to a report from China Daily, the "closed-loop test" of DC/EP had begun.

In January 2020, under the premise of adhering to two-tier operation, M0 replacement, and anonymity, the central bank basically completed the work of top-level design, standard formulation, function research and development, and joint debugging and testing. The next step is to reasonably select pilot verification areas, scenarios, and services To steadily promote the introduction and application of DC/EP.

In April 2020, the central bank stated that it will strengthen the top-level design, unswervingly promote the research and development of statutory DC/EP, and systematically promote the reform of the cash issuance and withdrawal system.

1.4 Accelerate the promotion of DC/EP and seize the trend

On February 20, the Riksbank announced the start of a pilot CBDC project; on March 27, France issued a call for applications for CBDC "experimental" applications, which will help the French central bank understand the risks and mechanisms of CBDC. Countries around the world are accelerating the promotion of CBDC, trying to seize the trend, and China is no exception.

At the end of 2019, the central bank has identified cities such as Shenzhen and Suzhou as pilot cities for DC/EP. The preparations before the landing of DC/EP are also in progress:

ATMs that support DC/EP. The future positioning of DC/EP is the replacement of M0, so it is estimated that the physical ATMs of all commercial banks in the country will need to support DC/EP. my country’s largest ATM machine supplier, GRG Express, has launched a DC/EP free exchange research and development project on ATM machines, and said it will launch ecological cooperation with banks and cryptographic manufacturers.

Third-party payment APP. DC/EP is positioned as a legal currency, and the requirements are the same as cash, and must be able to pay without a network, across banks, and across payment institutions. Now ordinary users use electronic payment the most, especially WeChat Pay and Alipay. So they also need to support DC/EP. Recently, Alipay has published 5 patents related to CBDC.

At present, the hardware and digital wallet APP of DC/EP are steadily advancing. DC/EP with a relatively complete system and broad application scenarios may lead the trend of CBDC.

secondary title

2. Market: the market rebounded and the trading volume decreased

2.1 Overall market: the market continues to fluctuate upwards

This week, the ChaiNext Digital Asset 100 Index closed at 605.97 points, up 6.1%. The ChaiNext Digital Asset 100X Index closed at 1569.72 points, up 6.6%.