Digital RMB payment is booming, and the pilot program is moving into the "deep water zone"

It is understood that the "55 Shopping Festival" was launched on April 30 and the event will continue until June 30. Citizens participating in the digital RMB pilot can make digital RMB payments at any merchant in Suzhou and Shanghai that has opened digital RMB acceptance, realizing the digital RMBization of consumption.

The "55 Shopping Festival" accelerates the implementation of the digital RMB. Analysts pointed out that the large-scale pilot projects and promotion of the use of the digital RMB not only solved the problem of the "last mile" of application, but also subtly established new payment habits.

In addition, it is worth mentioning that many people are looking forward to the application of digital RMB in cross-border payments. In particular, in the 25-year strategic cooperation agreement between China and Iran, the oil and trade between China and Iran are settled in RMB and digital RMB, which has attracted the attention of the world.

A single spark can start a prairie fire. As the digital RMB gradually matures and becomes more widely used, and even circulates globally, it undoubtedly gives us more room for imagination.

The scope of the pilot program has been expanded in an orderly manner

In the past two years, it is not new that the development of digital currencies by central banks of many countries has accelerated. Chetan Ahya, chief economist of Morgan Stanley, said in a client report that 86% of central banks around the world are exploring digital currencies, and the momentum of efforts by various countries is currently increasing.

The difference is that it seems that most countries have made a lot of noise but little action, and few have actually implemented it. Coincidentally, China's digital RMB is a standout and an undoubted "leader".

According to information, the research and development of China's digital RMB began in 2014, and the central bank established the Digital Currency Research Institute in November 2016.

Since April 2020, the digital RMB has been piloted in four cities: Shenzhen, Suzhou, Xiongan New Area, and Chengdu. According to data, in April 2020, Xiongan New Area held a digital RMB pilot promotion meeting, with 19 units participating, including McDonald's, Starbucks, Cainiao Station, and JD Unmanned Supermarket; in May, employees of district-level agencies, enterprises, and institutions in Xiangcheng District, Suzhou City, received 50% of transportation subsidies in the form of digital RMB from the central bank; in October, Shenzhen issued red envelopes totaling 10 million yuan to 50,000 winners, further expanding the application scenarios of the digital RMB test. Subsequently, Chengdu also conducted a similar pilot.

According to incomplete statistics from the media, in the past year, the "Digital RMB Red Envelope" pilot activities in pilot cities such as Shenzhen, Suzhou, Beijing, and Chengdu have accumulated a total of 8 rounds of tests and involved more than 1.2 million people.

According to Xinhua Finance, so far, pilot projects have been carried out in many cities including Beijing, Shanghai, Shenzhen, Chengdu, Suzhou, Xiong'an, and future Winter Olympics venues, covering both online and offline trading scenarios. In addition, the second batch of pilot projects will also include Changsha, Hainan, Qingdao, Dalian, Xi'an and other regions.

On April 28, the overseas edition of the People's Daily published an article titled "Digital RMB is getting closer and closer to us, covering scenarios such as catering services, life payment, shopping, and transportation." The article stated that as a new payment method in the digital economy era, digital RMB has great potential.

Experts said that one of the main features of the digital RMB that has attracted widespread attention is its convenience and speed. Since there are only payers and payees, this payment method can be credited in real time; in an offline state, it can also be paid like cash. More importantly, since controllable anonymity is achieved, merchants and third-party platforms have no right to obtain consumers' identity information and payment data, and privacy is higher.

It is worth mentioning that Li Bin, director of the Macroprudential Department of the People's Bank of China, also introduced at the press conference on financial statistics data for the first quarter of 2021 that the scope of the digital RMB pilot is currently expanding in an orderly manner. In the next stage, based on the feedback from all parties involved in the pilot, we will continue to improve and optimize the digital RMB technology, business and policy plans, deeply explore the application model of digital RMB, strengthen the universality and inclusiveness of digital RMB, improve product functions and applicability, and enhance the security and stability of the system.

Li Bin revealed that the pilot areas are still in the pilot testing stage overall, and there is no timetable for when they will be officially launched.

Enterprises deeply involved in pilot work

Not long ago, at the Boao Forum for Asia, Li Bo, deputy governor of the People's Bank of China, said that China will continue to do a good job in pilot work, expand the scope of the pilot, and build a digital RMB ecosystem in the future.

According to a research report by Great Wall Guorui Securities, the implementation of the digital RMB will accelerate in 2021. In addition to China's six major state-owned banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China, which have begun to promote digital RMB currency wallets in some pilot cities such as Shanghai, Changsha, and Shenzhen, many application scenarios of leading Internet platforms such as JD.com and Meituan have begun to accept digital RMB.

It can be seen that the comprehensive promotion of digital RMB from both the individual and corporate ends is a major feature of this year.

In January this year, JD.com piloted digital RMB salary payment and issued the first batch of digital RMB salaries to some employees stationed in Shanghai, Shenzhen, Chengdu, Changsha and Xi'an. On April 25, according to media reports, a relevant person in charge of Tencent revealed that since the launch of the digital RMB project of the People's Bank of China, Tencent has been deeply involved in the design, research and development, and operation of digital RMB, providing all-round support for the implementation of the digital RMB project. Subsequently, Tencent will further carry out controllable pilot projects under the guidance of the People's Bank of China.

On the same day, the Digital Currency Research Institute of the People's Bank of China signed a technical strategic cooperation agreement with Ant Group. The two parties will jointly promote the construction of the digital RMB technology platform based on Ant Group's independently developed distributed database OceanBase and mobile development platform mPaaS.

In addition, the digital RMB APP was recently updated and showed that multiple sub-wallets have been added under the six major state-owned banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China. Digital RMB can be used for payment on Ctrip, Tuniu, SF Express, etc.

On the morning of April 26, the use of digital RMB in the transportation scene of Hainan Free Trade Port was officially launched. On the same day, the launch ceremony of the digital RMB transportation scene jointly held by the Hainan Branch of the Bank of China and Hainan Haiqi Transport Group was held at the Haikou Automobile Transport Terminal, marking the official launch of the use of digital RMB in the transportation scene of Hainan Free Trade Port. As the only region in the province to pilot the digital RMB, Hainan will pilot applications in the entire region and multiple scenarios in the future.

Pan Helin, executive dean and professor of the Digital Economy Research Institute of Central South University of Finance and Economics, said in an interview with Securities Daily that the biggest highlight of the digital RMB pilot in the near future is cross-regional linkage. On the one hand, it is regional linkage to resolve the problems of cross-regional use; on the other hand, it is enterprise linkage to promote consumption through the digital RMB pilot.

Pan Helin believes that the cross-regional linkage of digital RMB is a further pilot of its operating mechanism. In the future, more regions will conduct cross-regional payment linkage to understand and explore the problems existing in the cross-regional use of digital RMB. This will further popularize digital RMB, enrich payment scenarios, and further realize the sinking of digital RMB usage scenarios, benefiting more small and medium-sized cities.

Recently, Song Xiangqing, deputy dean of the Institute of Government at Beijing Normal University, also stated that the large-scale promotion of digital currency will bring major changes to the current payment system and monetary structure.

"It may take some time for digital currency to become mainstream." Song Xiangqing said that the digital RMB is related to the stability of the financial system, consumers' experience and trust in the new currency, and more importantly, industrial development and the economic situation. Prudent decisions must be made and a steady start must be made.

Cross-border payments are expected to break through

"Digital currency is the future." Not long ago, J. Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission, said that while the United States is lagging behind, China has now launched the digital RMB.

At present, promoting the research and development of digital currency has become an important policy for countries to develop their currency markets. Some people also say that digital currency is a new battlefield that all major economies in the world are unwilling to miss.

In March this year, China and Iran officially signed a 25-year strategic cooperation agreement. Among them, oil settlements and trade exchanges between China and Iran will be settled in Chinese RMB and digital RMB. This news shocked the world.

Analysts believe that this is an important signal of the internationalization of the digital RMB, that is, taking the China-Iran cooperation as an opportunity to promote the internationalization process of the digital RMB.

"The implementation of this agreement will help to 'unbind' the US dollar and oil." Some people outside the country even believe that this shows that China has begun to try to link the RMB and digital RMB with oil.

It is worth mentioning that in February 2021, the Digital Currency Research Institute of the People’s Bank of China and the Hong Kong Monetary Authority conducted technical tests on the use of digital RMB.

On April 1, Wang Xin, director of the Research Bureau of the Central Bank, said that cooperation between the Central Bank and the Hong Kong Monetary Authority is routine work, and there will be more and more digital RMB testing scenarios in the future. On April 15, a spokesperson for the Hong Kong Monetary Authority said that the Hong Kong Monetary Authority is currently discussing the next phase of the testing plan with the People's Bank of China, and will conduct technical tests on further expanding and deepening the application of digital RMB for cross-border payments.

The information also shows that with the support of the Hong Kong Innovation Center of the Bank for International Settlements, the Digital Currency Research Institute of the People's Bank of China and the Hong Kong Monetary Authority, the Bank of Thailand, and the United Arab Emirates jointly launched a research project on a multilateral central bank digital currency bridge, aiming to explore the use of distributed ledger technology to achieve round-the-clock synchronous settlement of cross-border transactions of central bank digital currency pairs, namely PVP settlement.

Wang Xin said that my country's digital RMB is designed mainly for domestic retail payments, but when conditions are ripe and if there is market demand, cross-border transactions using digital RMB can also be realized.

Recently, Li Wei, deputy director of the National Financial Standardization Technical Committee and director of the Science and Technology Department of the People's Bank of China, published an article in Tsinghua Financial Review stating that legal digital currency is an important infrastructure in the digital economy era. To promote the construction of digital financial infrastructure with legal digital currency as the core, it is necessary to give play to the technical support, interconnection and normative leadership of standards, and to support the construction of an efficient and robust legal digital currency operation mechanism with a complete standard system, so as to help the steady development of digital RMB.

He believes that as a country that started researching legal digital currency early on, my country has achieved positive results in three main aspects: first, it has established a legal digital currency standard working mechanism; second, it has initially formed a legal digital currency standard framework; and third, it has actively participated in the international legal digital currency standard construction process.

However, Zhou Xiaochuan, former governor of the People's Bank of China, said that the starting point of the digital RMB is to do a good job in retail and upgrade the retail system. Therefore, improving the efficiency of the retail system is the basis for conducting all other businesses. On this basis, wholesale systems and cross-border payment operations are possible.