An article to understand the central bank's digital currency DCEP
Regarding the research and development of DCEP, I believe that everyone must have a lot of questions to ask. Today 52cbdc selected some important issues that everyone is more concerned about and analyzed and judged. At the same time, there are some questions about DCEP and the two major digital payment platforms Alipay and WeChat Pay 52cbdc also gave its own views, let’s take a look~
Question1: Why can't the central bank's digital currency use the decentralized characteristics of blockchain technology?
Wang Yongli, former vice president of the Bank of China, said: "Decentralized" and super-sovereign digital currency has a natural logical contradiction with the sovereign (legal) currency dominated by the central bank, and it is difficult to succeed; even if it can be launched, it will not be successful. It may completely replace the existing legal currency, and a country running two sets of "legal currency" systems at the same time is also a violation of "a country's sovereign (legal) currency is backed by tradable social wealth that is within the country's sovereignty and can be protected by law." ", it is difficult to maintain the basic requirement that a country's "currency aggregate" corresponds to the country's "wealth scale", and it is easy to cause chaos or even collapse of the monetary system, which is unworkable.
Although the network based on the blockchain system and various digital tokens can solve the problem of user privacy violation and disclosure by the current Internet network or intermediary agencies, but similarly, criminals who use this network for transactions, their identity information , transaction records, etc. will also be covered up. Therefore, adopting the complete decentralization and complete anonymity of blockchain technology is not only very impractical for the development of the central bank's digital currency, but will also provide breeding grounds and shelters for illegal and criminal activities such as anti-money laundering and anti-terrorist financing. This is a problem that the country will absolutely not tolerate. Therefore, when the country is developing DCEP, in order to better grasp the flow of funds and at the same time better protect user privacy, it has adopted a method that is not entirely based on blockchain technology for research and development.
Question2: Why is China's DCEP ready to come out, but it has not yet come out?
On the one hand, the legal currency has a profound impact on the national economy, so the technical exploration and program modification of digital currency needs to be continuously improved and enriched, and the pilots are constantly improved and improved to ensure that there will be no major problems after DCEP is popularized and used online. Yi Gang, governor of the central bank, said during this year's "two sessions" that the current pilot test is a routine work in the research and development process, which does not mean that the digital renminbi will be officially issued, and there is no timetable for when it will be officially launched. The purpose of the internal closed pilot test is to test theoretical reliability, system stability, functional availability, process convenience, scenario applicability and risk controllability.
At the same time, on the other hand, as Wang Yongli said, the central bank’s digital currency still belongs to the country’s unified sovereign (legal) currency. Therefore, the internationalization and international competitiveness of digital currency still depend on the overall national strength and international competition of the entire country. The strength depends on the international competitiveness of the country's central bank's digital currency system. Whoever launches the digital currency first will not be able to dominate the new world digital currency system. Therefore, the introduction of DCEP has to wait for the perfection of the technology and a suitable time, so that it can truly exert its maximum effectiveness.
Question3: What is the difference between Alipay, WeChat Pay and the DCEP of the electronic RMB?
First of all, in the process of using Alipay and WeChat Pay to conduct transfer transactions, etc., the transaction is indeed conducted through digital RMB. However, Alipay and WeChat Pay must be bound to a bank card during the transaction process, and the balance in the bank card must be used for transactions. Increase or decrease to complete the transaction, these two payment tools are like an electronic accounting book, which records the user's income and expenditure in the bank account in real time, and settles it through the commercial bank. Electronic currency paid by Alipay and WeChat is another way or form of currency stock. Currency stock refers to the total amount of cash and deposit currencies held by all economic entities in a country or region at a certain point in time, including MO, M1, M2, and M3.
M0=cash in circulation
M1=M0+ unit demand deposit
M2=M1+unit time deposit+personal savings deposit+customer deposit of securities company
M3=M2+Securities and other assets with high liquidity
DCEP is not. The official definition of DCEP is the Chinese version of the digital currency project, that is, digital currency and electronic payment tools. It is the legal digital currency under the research of the People's Bank of China. First of all, DCEP is based on a generalized account system and supports loose coupling of bank accounts, that is, anything that can form a unique personal identity can become an account, and a digital RMB wallet can be opened without a bank account. Through digital currency smart contracts, It can realize fixed-point to person delivery. And DCEP only replaces M0, that is, cash in circulation.
Alipay and WeChat payment need to conduct payment and other transactions through the Internet, while DCEP can also conduct payment transactions when both parties to the transaction are off-grid, that is, the officially mentioned dual offline payment. At the same time, to be more precise, Alipay and WeChat Pay are actually a transaction platform or tool capable of payment. People can choose to refuse to use these two methods of transfer transactions in daily life, but DCEP will serve as a substitute for M0 in the future. The emergence of electronic renminbi, developed by the central bank, is the legal tender of the country, and refusing to accept it will be as illegal as refusing to use cash renminbi.
Question4: What impact will the introduction of DCEP have on platforms such as Alipay and WeChat Pay?
According to previous news, the Digital Currency Research Institute of the Central Bank and Didi Chuxing formally reached a strategic cooperation agreement to jointly research and explore the scene innovation and application of digital RMB in the field of smart travel. Since then, Didi, Meituan Dianping and Bilibili (Bilibili) have all cooperated with a number of banks involved in digital currency projects. Among them, Meituan Dianping may try to expand usage scenarios such as Meituan bicycles, while the cooperation between Bilibili and participating banks has entered the stage of technology development. In addition, companies such as ByteDance are also discussing the possibility of cooperation with banks. But so far, according to public information, more than 20 companies have participated in the digital renminbi project, but Alipay and WeChat Pay, which occupy about 90% of China's digital payment market, are not on the list of participants. What is the reason?
These two companies, Alipay and WeChat Pay, account for a large proportion of the digital payment market, with rich payment scenarios, relatively wide coverage, advanced and developed payment technology, and these two companies have previously cooperated with provincial governments and national governments to carry out regional Block chain-related plans, so it is more likely to reach a close cooperative relationship on the road to DCEP research and development in the future. 52cbdc believes that the relationship between these two companies and the central bank’s digital currency DCEP in the future is likely to have two situations.
First, as Huobi Yu Jianing guessed, DCEP and the third-party payment platforms of these two companies may coexist in the short term, but in the long run, they may gradually merge into one system. Second, these two companies are likely to act as digital renminbi service providers like other commercial banks or qualified commercial institutions. That is, these institutions first pay the full amount and 100% of the reserve to the central bank, and then the People's Bank of China converts the DCEP coins to these designated operating institutions, such as commercial banks or other commercial institutions, and then these institutions exchange them to the public.
As for the so-called competition between the central bank and Alipay and Tencent, 52cbdc thinks it is less likely. First of all, these two companies are the leading Internet companies in China and even in the world, and they can bring a lot of tax benefits, and these two companies are of great significance for promoting the development of China's Internet industry and digital payment industry. If you want to become a competitive relationship, you will often pay a huge price, resulting in a situation where both sides suffer. Instead of this, it is better to cooperate and win-win. In terms of payment system technology improvement, the central bank cooperates with payment technology Internet companies with rich payment scene technology and experience, which should produce a 1+1>2 effect.
The above are some of the questions and answers about DCEP compiled by 52cbdc. If you have more and better ideas, or questions about DCEP, please leave a message to share with us.
