The digital renminbi is limited to alternative cash, and basically remains unchanged in terms of management system and operating rules, and will not have a significant impact on the existing financial system.
Original title: “Wang Yongli | Basic Points to Pay Attention to Digital RMB”
Written by: Wang Yongli
Recently, Fan Yifei, the vice governor of the People’s Bank of China, published a signed article ” Analysis on the Policy Implications of the Positioning of Digital RMB M0 ” in the “Financial Times”, in which the theoretical connotation, operation methods, management rules, and role positioning of the positioning of digital RMB M0 were carried out. To elaborate, it is very important for people to accurately understand that the People’s Bank of China has conducted tests and may soon launch a digital renminbi in circulation.
Among them, the following basic points require special attention:
The digital currency (“DCEP”) to be launched by the People’s Bank of China is the digital RMB
President Fan’s article directly titled “Digital Renminbi”, which directly clarified that it is the digital form of legal tender issued by the People’s Bank of China, which is equivalent to the Renminbi represented by banknotes and coins, rather than a new currency other than Renminbi. A set of monetary system.
Digital RMB is positioned as cash in circulation (M0)
President Fan’s article emphasized that digital renminbi must meet cash management related laws and regulations such as the “Renminbi Management Regulations” and adhere to central bank management; digital renminbi is a public product provided by the central bank to the public, and the People’s Bank of China implements a free policy consistent with cash for digital renminbi , The related design, exchange, circulation, withdrawal, destruction and other costs are borne by the government; digital renminbi does not count interest, and the central bank does not charge for services such as exchange and circulation; commercial banks do not charge individual customers for digital renminbi redemption or redemption services With reference to the current arrangements for cash issuance, the central bank will allocate issuance costs and establish a reasonable and effective incentive mechanism.
From this, it is clear that as cash, digital renminbi can only be used for payment and cannot be used for borrowing. Banks cannot use digital renminbi to issue loans or purchase bonds and derive new digital renminbi accordingly. The total amount of digital renminbi is strictly enforced by the People’s Bank of China. Quota management. As a result, there will be no impact on M1, M2 and related financial services.
Digital RMB exchange can only be done by designated commercial banks
The People’s Bank of China will prudently select commercial banks with strong capital and technology as the designated operating institution. Under the People’s Bank of China’s quota management, it will open different types of digital renminbi wallets based on the identification strength of customer information, and carry out digital renminbi redemption. For the redemption service, non-designated banks and non-bank payment institutions are not allowed to open digital RMB wallets and provide digital RMB exchange for customers.
As a designated operating institution, commercial banks can cooperate with non-designated commercial banks and non-bank payment institutions to jointly provide digital renminbi circulation services and be responsible for retail link management under the supervision of the People’s Bank of China to realize the safe and efficient operation of digital renminbi, including payment Product design innovation, scenario expansion, market promotion, system development, business processing and operation and maintenance services, etc., maintain a fair market competition environment, and let the market play a decisive role in resource allocation.
The above content shows that the introduction of digital renminbi is completely confined to replacing cash, and the management system and operating rules remain basically unchanged. It will not affect the entire currency’s performance, operating system and operating mechanism, as well as the entire financial system and operating mechanism. Etc. have a major impact.
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