Say goodbye to paper money, the central bank digital currency is really coming.
It is estimated that in the next two to three years, 30% to 50% of the currency will be replaced by digital currency, the central bank, and it will basically be popularized nationwide in digital currency.
From 2014 to now, the central bank has been studying digital currency for six years. Now, its mystery has finally been officially unveiled.
On April 14th, a photo of digital currency, the central bank, in the ABC account was exposed, which caused a heated discussion on the Internet. Subsequently, some media reported that Xiangcheng District of Suzhou was an important pilot area of digital currency (DC/EP). Since then, digital currency’s related concept stocks have risen for three consecutive days.
On the evening of April 17th, digital currency Research Institute of the Central Bank made the latest response to the internal test of digital currency. The digital currency Research Institute of the Central Bank said that the current online transmission of DC/EP information is the test content in the process of technology research and development, which does not mean that the digital RMB is officially issued. The current closed test of digital RMB will not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, financial market and social economy outside the test environment.
This also confirms that the above photos are true from the side. It is reported that digital currency, the central bank, has entered the internal testing stage, and Chengdu, Shenzhen, xiong’an new area and Suzhou will be the first batch of pilots. It is foreseeable that once the test is completed, it will be gradually popularized.
The news about digital currency, the central bank, has a long history, but it is the first time that such intuitive information has been exposed. After the news of the central bank’s pilot work in digital currency appeared, it also triggered many discussions. Recently, CCTV also popularized some basic information about digital currency DC/EP.
Generally speaking, as the digital form of legal tender, digital currency, the central bank, can be regarded as the "digital form" of RMB banknotes. Digital currency has the advantages of low circulation cost, easy maintenance, anonymity but traceability, and the ability to conduct transactions offline.
It is estimated that in the next two to three years, 30% to 50% of the currency will be replaced by digital currency, the central bank, and it will basically be popularized nationwide in digital currency.
Why issue digital currency?
When it comes to digital currency, it is estimated that some people will think of all kinds of air coins issued by the "coin circle" dedicated to cutting leeks, but in fact, the digital currency DC/EP issued by the central bank is essentially different from these air coins.
The full name of DC/EP is digital currency/electronic payment, that is, digital currency and electronic payment, which has national credit and is equivalent to legal tender (the legal tender in China is RMB).
In order to understand digital currency, the first of all, we should clarify three concepts, M0, M1 and M2.
M0: Generally, it refers to cash in circulation.
M1: generally including demand deposits of M0+ units.
M2: includes M1+ resident savings deposit+unit time deposit+other unit deposits+customer deposit of securities company.
When we use WeChat and Alipay for payment, we all need to bind our own bank card account to use it. This means that WeChat and Alipay belong to M1 or M2, while DC/EP has M0 attribute.
Positioning, the central bank’s digital currency (DECP) is a substitute for cash in circulation (M0). Mu Changchun, director of the digital currency Research Institute of the central bank, said, "Its functional attributes are exactly the same as paper money, but it is only a digital form" and "it is a digital payment tool with value characteristics".
Then, you may wonder, since there are paper money, why does the central bank issue digital currency? Because the latter has many characteristics that the former does not have.
First of all, digital currency circulates in digital form, without printing money and logistics, which saves the cost of RMB in circulation. It is no longer limited by third-party payment institutions, and there are no troubles such as exchange rate and change.
Secondly, digital currency can realize anonymous transactions like paper money, and every mobile payment we use every day will leave traces on commercial banks and payment institutions.
In addition, although anonymous transactions can be made, when there are a large number of suspicious transactions, the source and destination of these currencies can be traced and can be retrieved in the future, so money laundering, robbery, theft, etc. can be eliminated to a great extent, which cannot be done by using paper money.
At the same time, due to the different technologies used, digital currency, the central bank, can realize dual off-line transactions, even when subways, planes and so on are off-line.
Based on the above reasons, RMB is expected to circulate more widely in the future, and it is also very likely to be adopted and recognized by most countries in the world in the future, which is also the strategic significance of digital currency, the central bank. At the same time, digital currency, the central bank, has a national credit endorsement, which is a stable currency, surpassing all existing stable currencies.
As far as use is concerned, DC/EP does not need to be bound to a bank card, but you need to change your deposit into DC/EP in advance. Just like you take out some money from your bank card (it becomes M0), but this money becomes "invisible cash" DC/EP, and this money will enter your digital wallet APP, and it will not be consumed at this time.
From the screenshot of ABC’s digital currency wallet flowing out of the Internet, the main functions displayed are basically similar to the daily payment and management functions of the bank’s electronic account. For example, ABC’s digital currency wallet has four common functions: scanning code payment, remittance, receipt and payment, and touching.
The touch function is offline payment, which will be of great help to remote mountainous areas without network or underground garages with poor network.
In other words, for ordinary people in our daily life, apart from the advantages of offline payment, DC/EP is not much different from Alipay and WeChat payment. It is nothing more than whether we choose to open WeChat, Alipay or your digital wallet when paying the bill. That is to say, although the payment tools have changed and the functions have increased, the channels and scenarios have not changed. Most importantly, despite the high penetration rate of Alipay or WeChat payment, there will always be merchants who don’t like one of them, and if the merchants refuse digital currency, the central bank, it is equivalent to not accepting cash.
Is it a major positive for the blockchain? Rumor!
After the news of the central bank’s pilot project in digital currency appeared, the "currency circle", which had been deserted for a long time, ushered in a long-lost uproar. On April 15, Huijin and Gao Weida opened at the daily limit; On April 16, Jinguan shares, Zhongying Internet and Hengjiu Technology opened at the daily limit.
As of about eleven o’clock this morning, nearly sixteen stocks have gone up.
As can be seen from the above table, Feilixin, Huijin, Zhongying Internet, Julong, Hailian Jinhui and Guangdian Express all increased by more than 7%. In terms of individual stocks, 2,598 stocks rose, among which 150 stocks such as Hyundai Pharmaceutical, Kangyuan Pharmaceutical and Yuhetian rose by more than 5%.
Not only that, but bitcoin, which had been bearish before, has also followed suit recently, and the price once exceeded the $7,000 mark.
For a time, rumors such as "digital currency, the central bank, can be exchanged with Bitcoin", "legal tender can legally enter the currency circle" and "DC/EP can be fired" are rampant. Unfortunately, as mentioned in the article, the essence of digital currency, which is currently being piloted by the central bank, is the digital form of circulating legal tender, which is essentially different from the so-called "digital currency" such as Bitcoin.
Speculators who are thinking about "speculating in coins" may be disappointed, because the digital currency of the central bank is a digital RMB, which will only be exchanged in banks and institutions for 1:1, and there is no room for speculating in coins at all.
Secondly, China currently prohibits the exchange of legal tender for digital currency such as Bitcoin, and if DC/EP is officially used, not only will there be no exchange between DC/EP and Bitcoin, but the illegal exchange of Bitcoin will be easier to track because of the issuance of digital currency, the central bank.
Finally, at present, there is no evidence that digital currency, the central bank, adopts the form of blockchain. Of course, DC/EP may learn from blockchain technology in aspects such as authentication, public keys and keys, but it does not mean that DC/EP adopts blockchain.
Therefore, whether it is "currency circle" or "chain circle", it has little to do with digital currency, the central bank.
How to treat this digital RMB rationally?
From a historical perspective, we have reason to believe that, just like everything has a cycle of emergence, development and extinction, the disappearance of paper currency is entirely possible in the near future, and it is a general trend from paper currency to digital currency.
With the continuous development of technologies such as 5G, Internet of Things and big data, our life will inevitably undergo major changes, and we will eventually accept a more digital life, including the digitization of money.
In fact, not only the central bank, but also digital currency, USA, has made new progress on the other side of the globe. Last Friday, Libra, a stable currency project launched by Facebook, released version 2.0 of the white paper, which is the biggest update since the release of Libra white paper in June last year. Four key changes have been made to respond to the regulatory issues that had the greatest resistance before, namely:
(1) In addition to the multi-currency stable currency system, single-currency stable currency support is added;
(2) Improve the security of Libra payment system with a robust compliance framework;
(3) Give up the transition to unlicensed system in the future, while maintaining its main economic attributes;
(4) Build stronger protection measures in the design of Libra reserve.
Finally, with the gradual acceleration of RMB internationalization in China, issuing DC/EP is conducive to reshaping the trade settlement system and promoting RMB internationalization. Before the cross-border payment system of RMB (CIPS) was launched, the cross-border settlement of RMB was highly dependent on SWIFT system and CHIPS in the United States. However, the United States has launched several financial wars based on the SWIFT system and CHIPS system, so relying on foreign currency settlement systems will lead to fatal defects. Driven by the digital wave, it has become a historical requirement to form a new currency clearing network.
A recent report of the Bank for International Settlements (BIS) also emphasized that the current crisis hanging over the world has attracted people’s attention, that is, a payment method that can take a wide range of threats into consideration is needed. This is also an opportunity for RMB internationalization.
On the whole, the issuance of digital currency by the central bank is an inevitable process to meet the needs of the times and history. For people’s lives, it will not affect the stability of the existing financial system after all.
Maybe you are still full of doubts, but will you feel "really fragrant" on the day you use it?
References:
1. "Digital RMB" is ready to touch your wallet and counting money will become a thing of the past ",GeekPark Geek Park.
2. What should we know about the accelerated landing of digital currency, the central bank? ",titanium media
3. "Before the central bank digital currency, the blockchain stocks that were included in the new infrastructure soared", interface news.
4. "The central bank’s digital currency concept stocks have a daily limit and the development speed of blockchain has increased", Babbitt Information.
5. < It’s about to be tested internally. Is there anyone who doesn’t understand digital currency of the central bank? >, Black Cat Finance and Economics Society
Source: Internet of Things think tank (ID: IOT 101)
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Original title: "Farewell to paper money, the central bank digital currency is really coming."