Since the People's Bank of China announced its digital currency issuance plan, every move has become headline news. Recently, more new details of the implementation of the central bank's digital currency have been disclosed, which has aroused the attention of all walks of life around the world.
According to the latest news from Caijing, the central bank’s legal digital currency plans to start trial implementation in Shenzhen, Suzhou and other places from the end of this year.The pilot program in Shenzhen will be divided into two phases. At the end of 2019, the trial will be closed in a small-scale scene, and it will be widely used in Shenzhen from next year.
The People’s Bank of China’s plan to launch a legal digital currency has been in preparation for five years, and the timetable for its implementation has been accelerated recently. Behind this reflects,secondary title
Dormant for five years and ready to go
At the end of last month, Fan Yifei, deputy governor of the People's Bank of China, attended the "Eighth China Payment and Clearing Forum" and said that the central bank's legal digital currency DC/EP has basically completed the top-level design, standard formulation, function research and development, and joint testing. Reasonably select pilot verification areas, scenarios, and service scopes, and steadily promote the introduction and application of digital fiat currencies.
According to Mars Finance reports, the central bank has established a subsidiary Yangtze River Delta Financial Technology Co., Ltd. in Suzhou, and the legal person is Di Gang, the current deputy director of the Central Bank’s Digital Currency Research Institute.
The company was jointly established by the Central Bank’s Digital Currency Research Institute and Suzhou’s relevant units to undertake the construction and stable operation of legal digital currency infrastructure; undertake key technical research on legal digital currency and support for pilot scenarios, supporting research and development and testing; focus on blockchain , cryptography and other frontier directions of financial technology.
After the central bank established a digital currency research institute in Shenzhen in September, this news confirms that Suzhou has also been selected as a pilot city for the central bank's digital currency.
Looking back at the development of China's legal digital currency in the past five years, it can be seen that the central bank is quite forward-thinking in digital currency research; and after five years of research and development, it has reached the moment of accumulation.
What is DC/EP? In 2018, Zhou Xiaochuan, then Governor of the Central Bank, introduced at the press conference on the theme of "Financial Reform and Development" at the First Session of the Thirteenth National People's Congress: "DC, digital currency, is digital currency; EP, electronic payment, is electronic payment. "
The goal of the combination of digital currency and electronic payment tools is to replace a part of M0, that is, cash in circulation.
As Zhou Xiaochuan said: "The study of digital currency does not mean that the currency can realize the application of a certain technical solution, but that it is essentially to pursue the convenience, speed and low cost of the retail payment system. At the same time, security must also be considered. sex and privacy.”
As early as 2014, the central bank began to lay out the development of blockchain in various industries, and set up a research team in a low-key manner to conduct digital currency research. This initiative is globally pioneering and forward-looking.
In early 2016, the People's Bank of China held a digital currency seminar in Beijing. This meeting brought the central bank's digital currency to the surface, and for the first time demonstrated to the whole society that the Chinese central bank attaches great importance and determination to the issuance of digital currency, and has achieved phased research results.
On July 3, 2017, the Central Bank Digital Currency Research Institute was officially established in Beijing, and has successively applied for a number of patents related to digital currency.
2019 is undoubtedly a milestone year in the development of the central bank's DC/EP. Since the third quarter, authoritative news has flowed out that the legal digital currency is about to come out.
The pilot work led by the People's Bank of China involved the four major state-owned commercial banks of Industry, Agriculture, China, and Construction, and the three major telecom operators of China Mobile, China Telecom, and China Unicom.image description
The four major banks of industry, agriculture, China and construction will participate in the pilot work/picture source network
Compared with the first test of legal digital currency in 2017,This pilot will reach more C-end users,secondary title
Why did the central bank launch legal digital currency?
As more and more details about DC/EP are disclosed, all walks of life can get a glimpse of it, and China's strategic purpose of issuing legal digital currency is gradually becoming clear.
First of all, why is the central bank responsible for issuing digital currency? To put it simply, the issuance of legal digital currency by the central bank is to perform public functions.
Due to the non-reproducibility and detectability of digital currency, coupled with the need for macro-control, it can be said that only the central bank undertakes this responsibility and issues digital currency, which is realistic and operable.
So, what is the reason for China to accelerate the introduction of fiat digital currency?
The Digital Currency Research Conference held by the central bank in 2016 believes that under the new economic normal, exploring the central bank's issuance of digital currency has positive practical and far-reaching historical significance.
First of all, the modern credit paper currency system has certain defects. Issuing digital currency can firstly reduce the high cost of paper currency issuance and circulation; secondly, using digital currency for economic transactions can improve its convenience and transparency, which is of great significance for combating money laundering, tax evasion and other illegal and criminal activities.
From a macro and long-term perspective,Digital currency will increase the central bank's control over currency issuance and circulation,Thereby upgrading my country's financial system, supporting economic and social development, and improving stability.
Digital currency also has a feature that cannot be ignored, that is, cross-border attributes.This attribute may meet the demand for a low-cost, frictionless cross-border payment system, and it is likely to change the pattern and appearance of the global monetary system.
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The Global Competition of Legal Digital Currency
Behind the continuous acceleration of the central bank's timetable for the implementation of legal digital currencies, it also reflects the fierce competition among global powers on this track.
BIS managing director Augustin Carstens recently urged central banks to adopt digital currencies in a speech.He believes that banks should take control and is not in favor of projects by technology companies such as Libra. Libra has indeed encountered a red light, which has also awakened central banks of various countries to a certain extent.
At present, the European Central Bank is actively exploring digital currency, and France in particular has shown its ambition for digital currency, which is also in line with Macron's national strategy for France to become a European leader and revive Europe.
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ECB is exploring digital currency
Europe is currently facing severe challenges in various aspects. Some countries are still shrouded in the shadow of the European debt crisis. Brexit has also hit the confidence in European integration.Whether the introduction of CBDC can bring new economic vitality to the euro zone and expand the international influence of the euro still needs time to prove.
In addition, the Governor of the Central Bank of Ghana stated that the Central Bank of Ghana is considering issuing digital currency; the UAE-Saudi Arabia digital currency project has also been launched at the beginning of this year. It can be seen that many countries are paying attention to digital currency.
However, the current digital euro pilot is only aimed at the financial sector and has not yet involved personal retail payments.In contrast, China is at the forefront in this regard. This year’s trial in Shenzhen will involve C-end users. Major banks are working hard to explore the application of digital currency in different service scenarios.
At present, China is in the leading position in the global upsurge of digital currency research and promotion; and China itself has summed up a set of successful models in the practice of digital economy.Economist Zhu Min said that China is the largest and most advanced country in electronic payment in the world and has advantages. Moreover, the 'Belt and Road' scenario also provides a huge room for imagination for the development of China's digital economy.
However, while developing digital currencies, countries around the world need to face the challenge of innovative regulation.
Vikram Pandit, chairman and CEO of Orogen Group, believes that digital currencies are backed by central banks, and the era of digital finance may give birth to a new 21st century regulatory framework.
The most gratifying thing for the public is that the new regulatory system may solve the banking oligopoly and "too big to fail" problems that have plagued the financial industry for a long time.
China's financial regulators have also begun to actively explore the regulatory model for digital currencies.epilogue
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After five years of painstaking research and development, the central bank's digital currency has completed the prototype. Accelerating the pilot work and speeding up the implementation timetable is internally responding to the country's call to vigorously develop blockchain technology and applications, and externally it is responding to fierce competition from countries around the world.
China's advantages in this track are concentrated in the early entry time, national policy support, and successful technology and practical experience. It is foreseeable that the era of digital currency is accelerating towards people, the industry is innovating, and the rules are changing.In this transformation, China has the determination and ability to be number one.
