Shanghai is quietly testing the digital RMB, and reporters are visiting to reveal its usage

Source: Time Weekly

Author: Huang Kun

Chengdu distributed 40 million yuan in digital RMB red envelopes, which once again made digital RMB a hot topic.

Previously, Shenzhen, Suzhou, and Beijing have launched lottery activities to distribute digital RMB consumption red envelopes, each of which is 200 yuan. Recently, a reporter from the Times Weekly found that Shanghai has quietly launched a pilot program, and the Shanghai branches of the six major banks, namely, 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, have begun to select specific scenarios for internal testing.

Digital RMB is getting closer and closer to ordinary citizens.

On March 3, a reporter from the Times Weekly noticed that the words "digital RMB" appeared on the Heishi beverage vending machines labeled "Shentong Assets" at many stations on Shanghai Metro Line 2, including Century Avenue and Nanjing East Road, and that digital RMB could be successfully used for consumption.

The six major banks are conducting low-key internal testing

Digital RMB is a legal digital currency that has not yet been issued by the People's Bank of China, namely "digital currency electronic payment". It is based on a broad account system, supports loose coupling with bank accounts, is equivalent to banknotes and coins, and is a controllable and anonymous payment tool with value characteristics and legal tender.

A reporter from the Times Weekly experienced it on the spot and found that the six major banks, namely 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, have begun to provide services to exchange cash in bank cards into digital RMB.

Why can only these six bank cards be used? At the end of 2017, with the approval of the State Council, the People's Bank of China organized some strong commercial banks and relevant institutions to jointly carry out the research and development of the digital RMB system (DC/EP). According to the pilot situation in the three places, the project team led by these six operating institutions has met the conditions for participating in this activity, and other participating institutions are still actively conducting research and development.

A reporter from the Times Weekly noticed that in the 2021 social recruitment announcement released by the Postal Savings Bank of China head office a few days ago, talents are already being recruited for digital RMB clearing management positions, digital RMB operation management positions, digital RMB personal wallet management positions, etc. "Recruiting talents is a microcosm of commercial banks' emphasis on digital RMB operation management. It not only conforms to the development trend of digital RMB, but also helps to consolidate financial technology strength." Financial technology expert Su Xiaorui said.

Relevant personnel from the Shanghai Branch of the Industrial and Commercial Bank of China told the Times Weekly reporter that the digital RMB has the characteristics of security, convenience, unlimited legal compensation, and support for electronic payments. Currently, you must first go to a bank branch to register for digital RMB application information. Only after success can you download the "Digital RMB" APP to bind the card for use.

On March 3, a reporter from the Times Weekly interviewed one of the "early adopters". He said: "This is my first time using digital RMB for consumption. I am quite curious. After trying to buy cold drinks, I found that consumption is very convenient. The usage method is the same as WeChat and Alipay QR code payment. When paying, just show the QR code. And you can see the balance. During the transaction, screenshots and screen recordings cannot be realized. I feel relieved. It is just that it is still in the internal testing stage. You need to apply to the bank branch before you can use digital RMB."

What is the difference between digital RMB and Alipay and WeChat Pay? "Digital RMB is a legal tender issued by the People's Bank of China with national credit endorsement. It is a digital form of RMB." Zhou Liping, deputy director of the Payment and Clearing Research Center of the Institute of Finance of the Chinese Academy of Social Sciences, said that the positioning of digital RMB is to replace part of the cash, but not all of the paper money.

At present, cash mainly exists in physical forms such as banknotes and coins, while the digital RMB can be understood as an electronic version of RMB, with the same functional attributes as cash, and can be regarded as a digital form of cash. Banknotes and coins are placed in tangible wallets, which are inconvenient to carry and are mostly used for offline transactions; digital RMB is placed in an intangible digital wallet and can be used for offline and online transactions.

Expanded usage scenarios

At the beginning of 2021, the popularity of digital RMB in Shanghai has soared and frequently "stole the spotlight".

At the fifth session of the 15th Shanghai People's Congress, which opened on January 24, Shanghai Mayor Gong Zheng pointed out in his government work report that he will continue to promote greater opening up of the financial industry, continue to gather a group of functional and headquarters-type institutions, and promote the digital RMB pilot.

On January 5, Shanghai’s first digital RMB application scenario was implemented at Tongren Hospital Affiliated to Shanghai Jiao Tong University School of Medicine. In the staff canteen, hospital employees used the technology provided by China Postal Savings Bank and took the lead in using the digital RMB “hard wallet” to achieve a one-stop experience of ordering, consumption, and payment.

Regarding the latest developments of the digital RMB since the beginning of 2021, financial technology expert Su Xiaorui believes that it mainly presents three characteristics: First, the application scenarios are rich. In addition to traditional supermarkets and department stores, the digital RMB is expanding to more scenarios, such as insurance purchase, property fee payment, car services, etc.; second, the experience forms are diverse. In addition to the traditional "scan", the digital RMB can now also be "touch and pay", and wearable devices such as watches and bracelets have been tested; third, the pilot is multi-line and parallel. Although some cities have not officially announced the launch of pilot activities, small-scale scene access has appeared sporadically. Through preliminary preparations, it will help the pilot testing of the digital RMB and even lay a solid foundation and pave the way for subsequent national promotion.

On March 3, several Shanghai residents told the Times Weekly reporter that only a small number of people can "try it out" and the usage scenarios are limited. In this regard, industry experts pointed out that as a new payment tool, it is understandable to be cautious. The small-scale internal testing currently conducted by the six major banks in Shanghai is to prepare for the subsequent large-scale pilot and to prepare for expansion to more merchants and more scenarios.

Liu Bin, director of the Financial Research Office of the Pudong Institute of Reform and Development, said that the core feature of my country's digital RMB is the two-tier operating model: commercial banks pay 100% of the full reserve to the People's Bank of China to obtain digital RMB. The central bank's digital currency is still a liability of the central bank, guaranteed by the credit of the central bank, and has unlimited legal compensation. The public can open a digital RMB wallet through commercial banks and distribution institutions to obtain digital currency.

Liu Bin predicts that the testing of the digital RMB will gradually expand in the future, and will mainly focus on industrial application scenarios such as small and micro enterprise finance, supply chain finance, trade finance, corporate working capital management, and corporate salary and benefits; government application scenarios such as government subsidies, government welfare distribution, support funds, and fiscal funds management; cross-border application scenarios such as cross-border payments, cross-border remittances, cross-border trade finance, and cross-border investment and wealth management.