From October 23rd to 25th, the China Financial Forty Forum (CF40) and various organizing committee members held the 2nd Bund Finance Summit in Shanghai. The theme of the summit was “Danger and Opportunity: New Finance and New Development economic”.
On the 25th, Mu Changchun, director of the Digital Currency Research Institute of the People’s Bank of China, attended the forum and answered many questions about digital RMB.
Is digital renminbi a competitor to WeChat and Alipay?
What is the relationship between WeChat, Alipay and digital RMB? What’s the difference? Mu Changchun said that the two are not in the same dimension. WeChat and Alipay are financial infrastructures and wallets, while digital renminbi is a payment tool and the contents of the wallet. In the electronic payment scenario, the wallets of WeChat and Alipay contain commercial bank deposit currencies. After the digital renminbi is issued, everyone can still use WeChat Alipay to pay, but the contents of the wallet have added digital renminbi. At the same time, Tencent and Ant’s respective online merchant banks are also operating institutions, so there is no competition with digital RMB.
On purchasing power: paper money = digital RMB
Mu Changchun said that recently there have been rumors that some traders were forced to accept digital renminbi for the transaction of second-hand housing in Shenzhen, and were not allowed to exchange for gold or foreign currency. First, let’s talk about the pilot in Shenzhen. What everyone heard was that Luohu District issued digital RMB red envelopes to promote consumption. There was no pilot second-hand housing scenario. In addition, digital renminbi is equivalent to banknotes and coins. Anything you can buy with paper money can be bought with digital renminbi. Foreign currencies that can be exchanged with paper money can also be exchanged for digital renminbi, so don’t worry.
“Digital RMB and banknotes will coexist for a long time”
The issuance of digital renminbi is not achieved by administrative enforcement, but should be carried out in a market-oriented way. That is to say, we will issue as much as the common people need to exchange. In addition, as long as the people have the need to use banknotes, the People’s Bank of China will not stop the supply of banknotes. In the foreseeable future, digital renminbi and banknotes will coexist for a long time.
How to create a digital RMB ecosystem?
Mu Changchun said that in the entire digital RMB ecological construction process, we must maintain fair competition to ensure that the market plays a decisive role in resource allocation and fully mobilize the enthusiasm and creativity of all parties in the market. The issuance and circulation of digital renminbi involves all aspects of society. It has never been the responsibility of the People’s Bank of China, nor is it something that an institution can accomplish on its own. It requires the joint efforts of the whole society, so the central bank has been conducting research and development with all sectors of society in accordance with the principle of two-tier operation, and has achieved some results.
Digital RMB will be inclusive and easy to use
Mu Changchun said that in the process of digital RMB issuance, on the one hand, all commercial banks should also participate in circulation services. On the other hand, they should also ensure that all people, including poor areas and digitally disadvantaged groups, are provided with inclusive benefits. A convenient and easy-to-use digital central bank currency to avoid digital divide and financial exclusion. We have also been developing digital renminbi products suitable for the elderly and those who exclude the use of smart terminals.
How is the digital renminbi managed? Will it be overissued at will without the public’s knowledge?
Mu Changchun said that the digital renminbi should adhere to the central bank’s centralized supervision, and the following aspects should be done in the process:
The first is to coordinate the management of the digital renminbi issuance quota to ensure 100% preparation and prevent over-issuance.
The second is to formulate unified business standards, technical specifications, safety standards, and application standards to achieve interconnection between designated operating agencies and avoid payment barriers.
The third is to coordinate the management of digital RMB information. Fake digital renminbi wallets have appeared on the market. Therefore, just like the paper money era, the People’s Bank of China still faces the problem of anti-counterfeiting and anti-counterfeiting.
Fourth, it is necessary to coordinate the construction of digital renminbi issuance infrastructure, realize interoperability across operating institutions, and ensure that there will be no payment barriers.
