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Red Star News Reporter: Wu Danruo
Editor: Bai Zhaopeng
On October 11, Shenzhen officially announced that as of 8 o’clock on October 11, 2020, the appointment of the “Lixiang Luohu Digital RMB Red Packet” has ended. A total of 1,913,800 individuals in Shenzhen have successfully completed the “Li Bao” through the “i Shenzhen” system. “Enjoy Luohu Digital RMB Red Packet” pilot appointment registration.
According to the rules of the event, from 8:00 to 9:00 on October 11, the organizer of the event conducted a lottery drawing on the results of the reservation registration and confirmed the signature list, and all 50,000 individuals who won the “Luohu Digital RMB Red Packet” were drawn. From 18:00 on October 12th, the winning text message and download link will be sent to the winning individual. The appointment staff can check the result of the lottery through the “i Shenzhen” APP or the “i Shenzhen” WeChat public account “Lixiang Luohu” activity area.
This is the first public large-scale test of the digital renminbi in China, and it also means that the digital renminbi has once again taken a big step forward.
Pies in the sky, Shenzhen issued 10 million yuan digital currency red envelopes
On October 9, Shenzhen Luohu District distributed 10 million yuan in “Luohu Digital RMB Red Packets”, each with a value of 200 yuan and a total of 50,000 red packets.
Shenzhen officials stated that this event is a routine test in the digital RMB research and development process. It is jointly developed by the Luohu District Government of Shenzhen, the Shenzhen Central Branch of the People’s Bank of China, the Shenzhen Municipal Government Service Data Administration, Industrial and Commercial Bank of China Shenzhen Branch, Agricultural Bank of China Shenzhen Branch, Bank of China Shenzhen Branch, and China Construction Bank Shenzhen Branch.
Individuals who participate in the appointment to receive the red envelope only need to meet two conditions: one is that the geographical location of the appointment is within the administrative area of Shenzhen (including the Shenzhen-Shantou Special Cooperation Zone); the second is to use a mobile phone number in mainland China and the second-generation resident status Card for appointment registration.
Individuals in Shenzhen can register for the lottery through the “i Shenzhen” event reservation platform. After winning the lottery, download the digital renminbi app according to the SMS guidelines of the winning lottery. After opening the “personal digital wallet”, they can receive the “Luohu Digital RMB Red Packet”.
It is worth noting that there is no need to bind a bank card to receive and use the red envelope. However, if you pay for a transaction that exceeds the amount of the red envelope, you need to use the bank card of any of the four banks of Industry, Agriculture, China, and Construction to recharge or bind the wallet during the event.
Red envelopes can be consumed without threshold at 3389 merchants that have completed the digital RMB system transformation within the jurisdiction of Luohu District, which is equivalent to cash. Well-known companies such as Wal-Mart, China Resources Vanguard, and Sinopec all supported this event, covering various categories such as daily retail, catering consumption, and life services.
Image source of some merchants that can consume digital currency “i Shenzhen” WeChat official account
What is digital currency?
Central bank digital currency refers to the digital currency issued by the central bank, which belongs to the central bank’s liabilities, has national credit, and is equivalent to legal tender. The full name is “Digital Currency Electronic Payment”, and the English abbreviation is DC/EP.
Mu Changchun, director of the Central Bank’s Digital Currency Research Institute, pointed out that the functional properties of digital currency are exactly the same as banknotes. It is just a digital form and a digital payment tool with value characteristics. The financial nature of central bank digital currency is consistent with RMB cash.
What needs to be distinguished is that third-party payment methods such as WeChat and Alipay are only a kind of electronic currency, which can be consumed and withdrawn. After the withdrawal, the currency is still paper renminbi. Cash deposits and withdrawals can be made on the ATM. The currency itself Nothing has changed. The digital renminbi is a currency issued by the central bank, which is equivalent to the status of the renminbi, and needs to be exchanged 1:1 with the renminbi when used. Moreover, DC/EP using blockchain technology has the characteristics of irreplaceability and traceability, and the currency is more secure.
In addition, DC/EP supports dual offline payment in ordinary payment scenarios, while third-party payment methods only support single offline payment or dual offline payment in specific scenarios.
Zhou Xiaochuan, the former governor of the People’s Bank of China, once pointed out that “the development of digital currency is inevitable with technological development. In the future, traditional paper money and coins may gradually decrease in the form of currency, and may not even exist one day. It exists.”
The central bank’s digital currency research and development is steadily advancing
On October 11, Chen Yulu, deputy governor of the People’s Bank of China, wrote an article in “China Finance” that it is necessary to accelerate the development and controllable pilot of the central bank’s legal digital currency to ensure payment security. Strengthen financial technology innovation research and its application in financial infrastructure construction, bridge the digital divide, and improve operational efficiency and regulatory effectiveness.
The central bank’s digital currency research and development is progressing steadily.
In fact, as early as 2014, the central bank established a special team to conduct in-depth research on digital currencies. In 2016, the People’s Bank of China Digital Currency Research Institute was established.
In August 2019, my country clearly pointed out that it is necessary to accelerate the development of legal digital currency. With the successive releases of the “China (Xiongan New Area) Cross-border E-commerce Comprehensive Pilot Zone Construction Implementation Plan” and the “China (Beijing) Pilot Free Trade Zone Overall Plan”, the research on digital currency in my country has moved from the legal digital currency pilot zone And the construction of the digital financial system has begun the upward movement of cross-border payments to digital currencies.
At the end of 2019, the central bank announced that the DC/EP design work was basically completed and the closed-loop test was started.
It was not until 2020 that the digital renminbi pilot program was officially announced and the implementation began steadily.
On August 14, the Ministry of Commerce issued the “Comprehensive Deepening of Service Trade Innovation and Development Pilot Program”, which put forward in the section “Comprehensive Deepening of Service Trade Innovation and Development Pilot Tasks, Specific Measures, and Division of Responsibilities”: Pilot digital renminbi trials will be carried out in the Greater Bay Area and the pilot regions in the central and western regions where conditions permit. The promotion will be assisted by Shenzhen and other places and relevant departments of the future Winter Olympics scene, and will be expanded to other regions as appropriate.
Globally accelerating the layout of digital currency, China is at the forefront of the world
On October 9th, the Bank of Japan released the Central Bank Digital Currency Report in Tokyo, clarifying the future digital currency planning, setting and implementation route. The Bank of Japan stated that it plans to carry out the first phase of conceptual experiments in early 2021. Compared with the central bank’s digital currency goal of some countries focusing on domestic payments, the Bank of Japan hopes that its digital currency can be used for cross-border payments.
Governments and central banks around the world have carried out research on central bank digital currencies this year, and digital currencies are gradually approaching.
In January this year, the Group of Seven (G7) formally jointly formed a central bank digital currency group, which includes the central banks of major economies in Europe, Asia, and North America.
The Bank of France announced in July this year that eight companies including HSBC, Accenture and Societe Generale were shortlisted for its digital currency pilot program. They will jointly explore ways to convert financial instruments into central bank currencies and improve their cross-border payment conditions.
In the same month, the Bank of Thailand has begun to use digital currency to conduct financial transactions with some large companies. This indicates that the central bank has entered the third stage of digital baht development.
Under the coordination of the Bank for International Settlements (BIS), seven major global central banks, including the Federal Reserve, the European Central Bank, the Bank of England, and the Bank of Japan, issued reports that clarified what digital currencies should look like. The report shows that the core characteristics of digital currency should include flexibility, low or no cost, appropriate standards and a clear legal framework, and the private sector should play an appropriate role.
Analysts said that my country’s research and development of legal digital currency is comparatively in the forefront of the world and is already experimenting with digital renminbi. This large-scale test in Shenzhen has moved from a closed test to an open test, marking an important step forward for the digital RMB to be launched to the public.