20 million Suzhou digital RMB red envelopes for "Double 12", all six major banks' wallets are connected

Source: Securities Daily·Financial No. 1 Courtyard

Author: Li Bing

The digital RMB pilot project has made new progress. Following Suzhou's recent 20 million yuan digital RMB red envelope test, the Hong Kong Monetary Authority also stated that it is currently studying the technical testing of using digital RMB for cross-border payments.

Xia Ping, a member of the Blockchain Committee of the China Computer Society, told the "Financial No. 1 Courtyard" that the widespread use of digital RMB requires the support of new infrastructure. At present, the Suzhou pilot is only a routine test and does not mean that the digital RMB has officially landed.

"After the digital RMB is put into use in the future, there are two aspects worth looking forward to." Xia Ping pointed out, "First, the combination of the Internet of Things and blockchain is a great progress from the perspective of secure payment, which truly realizes the integration of the Internet of People and the Internet of Things; second, the digital RMB can be distributed in a targeted manner as a monetary policy adjustment tool. From the moment the currency is issued until the moment it is destroyed, it can be tracked and traced throughout the process, and the accuracy of currency placement will reach an unprecedented level."

The first trial of "dual offline" payment

According to information officially disclosed by JD Digits, the Suzhou pilot will be combined with the "Double 12 Suzhou Shopping Festival" to distribute a total of 20 million yuan in digital RMB red envelopes to all eligible Suzhou citizens, with a total of 100,000 red envelopes. Among them, JD Mall supports citizens to use digital RMB to pay when purchasing self-operated goods, becoming the first online scene to access digital RMB in the pilot. In addition to online scenes, nearly 10,000 offline merchants in Suzhou City and offline scenes such as Five Star Appliances, JD Home, and JD Convenience Stores under JD have stores that support the use of digital RMB.

An insider close to the pilot test revealed to "Financial Courtyard No. 1" that "Compared with the Shenzhen pilot, the Suzhou pilot has made breakthroughs in both technology and scenarios. The scenarios are being 'added', and the technical reserves are gradually being expanded. The scenarios are a combination of online and offline methods, which is more conducive to expanding the scope of the test."

The person further stated, "One of the online tests is that citizens whose delivery addresses are within Xiangcheng District can choose to use digital RMB to pay for JD.com's self-operated products on delivery. The JD.com deliveryman will pay for the goods after they arrive at the door. This project will also be tested on a small scale."

It is worth mentioning that the technology involved in the Suzhou digital RMB red envelope pilot is more extensive, and the "dual offline" function is introduced for the first time. It is reported that the "dual offline" function is different from mobile payment. The digital RMB can be understood as a property right system, which does not involve problems such as asynchrony between information flow and capital flow. Therefore, it can support the use of the "dual offline" payment function in special scenarios such as airplanes and basements or in specific controlled environments. However, the "dual offline" function test based on near-field wireless technology will not cover all digital RMB red envelope winners, but will select less than 1,000 people from 100,000 people to test the function.

The insider stressed that although the test of the 'dual offline' function was a small-scale local test, the relevant technology has matured.

Wallet access to the six major state-owned banks

Compared with the Shenzhen pilot where digital RMB red envelopes could only be opened in the wallets of the Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank, the Suzhou pilot added Bank of Communications and Postal Savings Bank of China as designated operating institutions. This means that the six major state-owned banks have become designated operating institutions for the digital RMB.

The above-mentioned insider told "Financial No. 1 Courtyard" that "the form of wallet access for the six major banks is the same, but the 'roles' played by each bank behind the scenes are different, and there will be division of labor."

Liu Bin, director of the Financial Research Office of the China (Shanghai) Pilot Free Trade Zone Research Institute, agreed with this statement. He believes that "during the pilot process, the central bank will not impose rigid regulations on the pilot of each bank. Each bank will choose a suitable pilot model based on its own business advantages, scenarios, technologies, channels and other comprehensive considerations. It can be said that the 'Tian Ji Horse Racing' model is adopted to give full play to the enthusiasm of each bank, allowing banks to tap their own advantages and further promote the pilot work of the digital RMB."

It is reported that on the evening of December 11, Suzhou City will officially launch the "Double 12 Suzhou Shopping Festival" event, focusing on the six major elements of food, accommodation, transportation, travel, shopping, and entertainment, and the two economic forms of night economy and brand economy. It will mobilize nearly 10,000 offline merchants and e-commerce companies to participate in the digital RMB red envelope activities, and work with the six major state-owned banks and many commercial enterprises such as JD Digital, Huawei, and vivo to jointly create application scenarios.

Liu Bin believes that banks play an important role in my country's two-tier operating system of the digital RMB, and it is very necessary for the Suzhou digital RMB pilot to gather the six major banks.

Yu Baicheng, president of Zero One Research Institute, told "Financial No. 1 Institute" that "commercial banks are important participants in the digital RMB. This participation in the pilot shows that state-owned banks are relatively mature in the research and development of digital RMB wallets."

Chen Wen, director of the Digital Economy Research Center of the School of Finance at Southwestern University of Finance and Economics, pointed out to "Financial No. 1 Courtyard" that "for large state-owned banks, the value of operating digital RMB lies in the acquisition of retail payment data, which is expected to form competition with existing payment tools such as WeChat Pay and Alipay. Based on the accumulation of retail transaction data, large banks are expected to optimize the design of retail financial product lines."

There are many new developments in the digital RMB

"No. 1 Financial Courtyard" noticed that there have been many new developments in the digital RMB pilot.

Prior to this pilot, JD Digits had reached a strategic cooperation with the Digital Currency Research Institute of the People's Bank of China. Based on the digital RMB project, the two parties jointly promoted the research and development of mobile basic technology platforms, blockchain technology platforms, etc., and combined with various scenarios of JD.com to jointly promote the innovation of digital RMB's mobile application functions and its implementation in online and offline scenarios.

On December 4, Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, published an article titled “New Trends in Fintech – Cross-border Payments”, pointing out that the HKMA is currently working with the Digital Currency Research Institute of the Central Bank to study technical tests for cross-border payments using digital RMB and make corresponding technical preparations.

Recently, the Digital Currency Research Institute of the Central Bank and China UnionPay Business Co., Ltd. signed a strategic cooperation agreement to jointly study innovative applications in the fields of online and offline payment scenarios in the pilot test of digital RMB. The two parties will combine the existing business scenarios of China UnionPay Business, based on the characteristics of digital RMB and the wallet ecosystem, to jointly study the expansion of the product functions and application scope of digital RMB and promote the construction of the digital RMB ecosystem.

Regarding the progress of the digital RMB, Liu Bin said, "The digital RMB pilot is a necessary work that must be done before the launch of the digital RMB. It does not mean that the digital RMB is not far from being truly launched. The real implementation of the digital RMB still requires many conditions, including supporting laws and regulations, widespread social recognition and support, collaboration among various ministries and commissions, the central bank's reserves of technology and talents, and supporting infrastructure. A lot of work still needs to be done."