Text ︱ Esens
The world today is undergoing major changes unseen in a century, and the digital economy has become a new engine leading the high-quality development of the future economy. Among them, the central bank’s digital currency (DC/EP), as a new form of the renminbi’s development into the digital economy era, is highly anticipated and highly anticipated.
On November 6, the People’s Bank of China released the “China Financial Stability Report (2020)”. This report of more than 80,000 words has a huge amount of information. Among them, there is no official timetable for the introduction of the digital RMB system.
This follows the full disclosure of the “Proposals of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and Long-Term Goals for 2035” (hereinafter referred to as the “14th Five-Year Plan Proposals”) on November 3. After mentioning that it will “securely advance digital currency research and development”, it once again released a signal of caution.
In fact, China has become the “leader” of the global digital currency, and in the face of many countries around the world accelerating the development and application of central bank digital currencies, this steadfast stance, as Fed Chairman Powell said, “do It’s more important to be first in comparison.”
Promote R&D work steadily
With the continuous outflow of digital renminbi news, the expectations of the outside world have become stronger.
Regarding the 14th Five-Year Plan, there are many interpretations of its meaning and key content. Among them, it is mentioned that it will build a modern central bank system, improve the money supply control mechanism, steadily promote digital currency research and development, improve the market-based interest rate formation and transmission mechanism, and “steadily promote digital RMB research and development.”
On November 6, the People’s Bank of China released the “China Financial Stability Report (2020)” and stated that there is no timetable for the official launch of the digital RMB system. At the same time, the People’s Bank of China will continue to advance the research and development of the digital renminbi system in a steady and orderly manner, conduct pilot tests, strengthen relevant policies and impact research, and continuously optimize and improve research and development design.
The People’s Bank of China released the “China Financial Stability Report (2020)”
Careful people find that the key word mentioned above is “secure progress.” Analysts believe that this shows that the depth of technological development and the breadth of application scenarios of the central bank’s digital currency is still in the initial stage and needs to be continuously improved and developed.
In addition, the report also pointed out that international organizations and central banks of certain economies have carried out forward-looking studies on the possible impact of CBDC on the financial system. In general, the potential impact of CBDC varies greatly due to its type, operation method, and interest calculation mechanism. Retail CBDCs that use a single-tier operation model or interest-paying have a greater impact on monetary policy transmission and financial disintermediation, while wholesale CBDCs and retail CBDCs that use a two-tier operation model without interest-paying have less impact on the financial system .
The report believes that there are four specific points: first, interest-bearing CBDC may affect the monetary policy transmission mechanism, while non-interest-bearing CBDC has less impact; second, interest-bearing CBDC may have an impact on banks’ financial intermediary functions. Interest-bearing CBDC has less impact; third, CBDC can help improve payment efficiency, reduce payment costs, and help inclusive finance; fourth, CBDC can help improve anti-money laundering, anti-terrorist financing, and anti-tax evasion capabilities.
Wang Yongli, former deputy governor of the Bank of China, pointed out that the digital renminbi has undergone major changes in the payment operation system and mechanism, that is, the central bank has become the core portal and clearing center for digital renminbi operations, realizing “money is payment and payment is settlement”.
An industry analyst also believes that the digital renminbi will help promote the digital transformation of commercial banks. Next, commercial banks should take the initiative to seize opportunities, select application scenarios based on their own advantages, and promote their own digital transformation and development.
Li Lianxuan, the chief researcher of Ouke Cloud Chain Research Institute, once said that for the central bank’s legal digital currency to be better used in trade settlement or supply chain financing, three bottlenecks need to be broken: first, at the technical level, the existing blocks Chain technology still cannot meet DCEP’s demand for high business concurrency; the second is to effectively solve moral hazard. In the field of small retail, for example, the industry is currently worried about a major moral hazard, that is, the double spending problem; third, the central bank’s legal digital currency cannot Provide interest income, so whether core enterprises in the industry chain with relatively ample funds are willing to use legal digital currency for trade settlement is still a question.
The article “Does the global racing digital currency “do it fast” or “do it right” published by the Beijing Business Daily pointed out that in the unprecedented changes, under the risk of high overhead inflation, the debt is increasing. In front of Snowball, everyone is looking for the next possibility of currency. Therefore, haste is not fast.
Diversified exploration
Since the beginning of this year, various tests and preparations for the digital renminbi are proceeding in an orderly manner.
In April, Xiong’an New District held a statutory digital RMB pilot promotion meeting, which included 19 units including McDonald’s, Starbucks, Cainiao Station, and JD Unmanned Supermarket. In May, various district-level agencies, enterprises and institutions in Xiangcheng District, Suzhou City Employees use the central bank’s digital renminbi to issue 50% of the transportation subsidy; in October, Shenzhen issued red envelopes totaling 10 million yuan to 50,000 successful applicants, further expanding the application scenarios of digital renminbi testing. Not only that, Chengdu is also conducting a digital RMB pilot program, with more than 50,000 digital currency users in the pilot area.
On August 14, the Ministry of Commerce issued the “Notice on Issuing the Overall Plan for Comprehensively Deepening the Pilot Program for the Innovation and Development of Trade in Services” (hereinafter referred to as the “Notice”). The notice requires that digital RMB pilot projects be carried out in the Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, and pilot areas in the central and western regions where conditions permit. In addition, internal closed pilot tests will be conducted in the Winter Olympics scene in the future.
The Ministry of Commerce issued the “Notice on Issuing the Overall Plan for Comprehensively Deepening the Innovation and Development of Service Trade”
From the perspective of application scenarios, the pilot is mainly focused on retail payment scenarios, covering transportation, life payment, catering services, shopping consumption, government services and other fields, meeting consumers’ demand for convenient and efficient payment.
On October 25, Mu Changchun, director of the Digital Currency Research Institute of the People’s Bank of China, stated at the 2020 Bund Financial Summit that information on the digital renminbi should be coordinated and managed. Coordinate the management of digital renminbi wallets, unify the digital renminbi cognition system, and effectively reduce the cost of anti-counterfeiting. According to the principle of two-tier operation, the central bank and designated operating agencies will jointly develop a wallet ecological platform by adopting a co-construction and sharing method. At the same time, it is necessary to realize their own visual recognition and characteristic functions.
He believes that in the issuance of digital renminbi, 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, provide inclusive benefits. Sexual and easy-to-use digital central bank currency to avoid digital divide and financial exclusion.
On November 2, the governor of the People’s Bank of China, Yi Gang, stated that the digital renminbi can currently be used in four pilot projects through “QR code” or “tap and go.” The pilot phase operated smoothly, with more than 4 million transactions, corresponding to more than 2 billion yuan. At the same time, Yi Gang pointed out that China’s digital currency is still in its infancy and requires a more complete legal framework and regulatory requirements that focus on transparency. In the future, it will discuss the framework and currency stability with the international central bank and regulatory authorities.
“At present, my country’s digital renminbi has completed top-level design, function research and development, standard formulation, joint debugging and testing, and it has been at the forefront of digital cheating by global central banks.” The above-mentioned analysts believe that in the process of passing closed tests and pilot projects in some regions, the number The RMB will also undergo a series of optimizations and improvements.
Tighten the string of supervision
The 14th Five-Year Plan proposes to build a modern central bank system, improve the money supply control mechanism, steadily promote digital currency research and development, and improve the market-based interest rate formation and transmission mechanism. At the same time, improve the financial risk prevention, early warning, handling, and accountability systems, and zero tolerance for violations of laws and regulations.
On November 3, CCTV Finance commented that under the current situation, the pace of domestic technological and financial innovation cannot be stopped, and the exploration and experimentation of digital currencies are also actively being carried out. The construction of a matching regulatory system needs to be accelerated, requiring complex and complete formulations. The legal and regulatory frameworks in place have strengthened the red and bottom lines of risk prevention.
Prior to this, on October 23, the People’s Bank of China publicly solicited opinions on the “People’s Bank of China Law of the People’s Republic of China (Revised Draft for Solicitation of Comments)”. Among them, it is proposed that the renminbi includes physical forms and digital forms to provide a legal basis for the issuance of digital currency; in order to prevent virtual currency risks, it is also clear that any unit or individual is prohibited from making and selling digital tokens.
The People’s Bank of China publicly solicits opinions from the public on the “Law of the People’s Republic of China on the People’s Bank of China (Revised Draft)
On October 21, the People’s Bank of China formally released three financial industry standards, namely the “Financial Technology Innovation Application Test Specification”, “FinTech Innovation Safety General Specification”, and “FinTech Innovation Risk Monitoring Specification”.
Among them, the “Financial Technology Innovation Risk Monitoring Specification” clarifies the monitoring framework, objects, processes and mechanisms of financial technology innovation risks, and requires the use of institutional reporting, interface collection, automatic detection, and information sharing to analyze the operation status of innovative applications in real time. Realize the dynamic detection and comprehensive evaluation of potential risks to ensure that the risks of financial technology innovation applications are generally controllable. The “Monitoring Regulations” also mentions the safety of technology use and requires the monitoring of technologies such as artificial intelligence, big data, cloud computing, blockchain, and the Internet of Things.
On November 6, the People’s Bank of China announced in the “China Financial Stability Report (2020)” that the financial management department will do a good job of coordination and coordination, strengthen the top-level design and overall layout of supervision, and accelerate the improvement of financial technology supervision in line with China’s national conditions. Framework: First, based on innovative regulatory tools, based on summarizing the experience of financial technology innovation supervision pilots, improve the risk monitoring system, publish white papers in a timely manner, and launch financial technology innovation regulatory tools that are in line with China’s national conditions and are in line with international standards as soon as possible; Regulatory rules are the core, and targeted regulatory rules will be issued in a timely manner to ensure that the financial technology business has rules to follow in business compliance, technical security, risk prevention and control, and solve regulatory gaps and regulatory arbitrage problems caused by lagging rules; The third is to use digitization as a means to build a digital regulatory reporting platform, adopt artificial intelligence technology to realize formalization, digitization and proceduralization of regulatory rules, accelerate the construction of digital regulatory capabilities, and enhance regulatory penetration and professionalism.
“It has been found that counterfeit digital renminbi wallets have appeared in the market.” Mu Changchun said a few days ago that in the era of digital renminbi, there are still problems of anti-counterfeiting and anti-counterfeiting.
He also said that digital renminbi should adhere to the centralized supervision of the People’s Bank of China: first, it is necessary to coordinate the management of the digital renminbi issuance quota, ensure 100% preparation, and prevent over-issuance; second, it is necessary to formulate unified business standards, technical specifications, and safety standards. And application standards to avoid payment barriers; the third is to coordinate the management of digital renminbi information; the fourth is to coordinate the construction of digital renminbi issuance infrastructure, realize interoperability across operating institutions, and ensure that there will be no payment barriers.
