More information has surfaced. What impact will the digital RMB have?

Digital RMB (DC/EP) is undergoing closed testing internally, which has attracted attention. Recently, more information about digital RMB has surfaced: Beijing proposed to build a digital currency pilot zone, the Central Bank Digital Currency Research Institute reached a strategic cooperation with JD Digits, and the Deputy Governor of the Central Bank Fan Yifei wrote an article to "respond" to multiple market concerns... Industry insiders interviewed by the Economic Information Daily reporter said that digital RMB will provide more options for the existing electronic payment market, and will have both competition and cooperation with existing non-bank payment institutions. At the same time, new regulatory requirements may be put forward for digital currency in the future. How to "protect data" and how to ensure appropriate "controllable anonymity" may be important considerations for improving supervision in the future.

Attention continues to grow, but there is no timetable for launch

According to the official statement of the central bank, there is still no timetable for the launch of the digital RMB. However, recently, more information about the digital RMB has surfaced, and market attention to it has continued to heat up.

On September 21, the "Overall Plan for the China (Beijing) Pilot Free Trade Zone" was released, proposing to support the People's Bank of China Digital Currency Research Institute to establish a financial technology center and build a legal digital currency pilot zone and digital financial system.

On September 21, JD Digits announced that the Digital Currency Research Institute of the People's Bank of China and JD Digits have officially reached a strategic cooperation. Based on the digital RMB project, the two parties jointly promote the research and development of mobile basic technology platforms, blockchain technology platforms, etc.; and combined with the existing scenarios of JD Group, jointly promote the innovation of mobile application functions of digital RMB and the implementation of online and offline scenarios, and promote the construction of the digital RMB wallet ecosystem. In July this year, Didi Chuxing also announced that the Digital Currency Research Institute of the People's Bank of China and Didi Chuxing have officially reached a strategic cooperation agreement to jointly study and explore the scenario innovation and application of digital RMB in the field of smart travel.

On September 14, Fan Yifei, deputy governor of the People's Bank of China, elaborated on many hot issues of market concern under the title of "Analysis of the Policy Implications of the Positioning of Digital RMB M0". The article points out that from the perspective of the M0 fee system, the digital RMB is a public product provided by the central bank to the public, which does not pay interest, and the central bank does not charge for services such as exchange and circulation. From the perspective of the issuance model of M0, commercial banks should assume the function of exchanging digital RMB for the public. In order to ensure the security and stability of the digital RMB system, commercial banks with relatively strong capital and technology should be carefully selected as designated operating institutions to take the lead in providing digital RMB exchange services. Under the premise of centralized management by the central bank, balance stability and innovation, explore the cooperation model between designated operating institutions and other commercial banks and institutions, and jointly provide digital RMB circulation services.

In addition, in August this year, the CCB mobile banking system conducted internal testing of digital currency wallets in some areas, which was exposed by the media and received widespread attention. According to reports, users can obtain query, payment, transfer, redemption, and redemption services through the digital RMB wallet channel, including converting cash or bank deposits into digital RMB, and converting digital RMB into cash or bank deposits. However, the test has now ended.

Providing more options for existing electronic payment systems

How will various financial and payment institutions participate in the issuance of digital RMB in the future? What impact will it have on existing widely used electronic payment tools such as WeChat and Alipay?

Fan Yifei said that specifically, as designated operating institutions, commercial banks are responsible for opening different types of digital RMB wallets for customers according to the strength of customer information identification under the quota management of the People's Bank of China, and providing digital RMB exchange services. At the same time, as designated operating institutions, commercial banks, together with other commercial banks and related institutions, will undertake the circulation services of digital RMB and be responsible for the management of retail links under the supervision of the People's Bank of China, so as to realize the safe and efficient operation of digital RMB, including payment product design innovation, scenario expansion, market promotion, system development, business processing and operation and maintenance services. In this process, it is necessary to maintain a fair competition environment and ensure that the market plays a decisive role in resource allocation, so as to fully mobilize the enthusiasm and creativity of all market parties and maintain the stability of the financial system.

Zou Chuanwei, chief economist of Wanxiang Blockchain, said that the "aorta" of my country's electronic payment is commercial banks, and the "capillaries" are non-bank payment institutions. Digital RMB is aimed at retail payments, and has a lot of overlap with non-bank payment institutions in terms of target users and scenarios, which will provide more redundancy for the current electronic payment system. The legal tender feature of digital RMB will help break down retail payment barriers and market segmentation, avoid market distortions, protect the rights and interests of financial consumers, and provide a universal base currency for the development of the digital economy.

So will there be a strong substitution relationship between the digital RMB and payment methods such as WeChat and Alipay? Zou Chuanwei told the Economic Information Daily reporter that there is both competition and substitution between the two, as well as a cooperative coexistence relationship. He said that in the field of retail payments, the digital RMB will occupy a part of the market share that originally belonged to non-bank payment institutions. At the same time, non-bank payment institutions and digital RMB each have their own suitable scenarios and users. The digital RMB is superior in terms of privacy protection, security, and credit foundation. However, for the digital RMB to be truly promoted, it is inseparable from the cultivation of users' mobile payment habits by non-bank payment institutions, the penetration of retail payment scenarios, and the establishment of online and offline acquiring systems. For example, it is possible to consider allowing users to use digital RMB to recharge the accounts of non-bank payment institutions.

Chen Wen, director of the Digital Economy Research Center of the School of Finance at Southwestern University of Finance and Economics, said that at a time when third-party payment is so convenient, the absolute scale of cash use is still large, which fully demonstrates that the promotion of digital legal tender can fill the market gap, but not necessarily seize the market of third-party payment institutions; and the public's increasing attention to personal information privacy in the digital economy era also provides a guarantee for the incremental market of the central bank's digital currency. "The circulation link mobilizes market forces and promotes the combination of digital RMB and payment scenarios. In this area, industrial capital has a lot of opportunities to intervene. The promotion of digital RMB will be an innovative practice to fully mobilize market forces." He said.

How to balance "controllable anonymity" becomes the focus of attention

Fan Yifei also pointed out that the digital RMB has digital characteristics and is not fully subject to the regulatory rules for the circulation of physical cash. It is necessary to formulate regulatory requirements specifically for the digital RMB and to build a good circulation environment for the digital RMB. At the same time, as the digital RMB issuance and circulation system gradually matures, the corresponding laws and regulations should be improved in a timely manner.

Chen Wen said that the controllable anonymity of the digital RMB, "real name in the background, voluntary in the front", has created favorable conditions for the implementation of compliance supervision work such as anti-money laundering, anti-terrorist financing, and anti-tax evasion. At the same time, retail payment data is an important production factor driving innovation in the digital economy. Supervision should also formulate corresponding data classification and use plans to promote the rational planning and use of mobile payment data under the protection of personal data privacy.

Zhou Sha, founder of MOAC Blockchain and CEO of Jingtong Technology, said that how to legally define the degree of controllable anonymity of digital RMB is the focus of attention from all walks of life at home and abroad. Digital RMB needs to meet consumers' privacy needs while ensuring compliance with the "three anti-corruption" requirements. Whether this balance point accepted by all parties can be found will affect its future international prospects, and will also affect consumers' enthusiasm and acceptance of digital RMB. He said that digital RMB will be subject to competitive pressure from CDBC (central bank digital currency) projects in various countries around the world, and these pressures will be one of the important driving forces for the digital RMB to move forward and overcome many difficulties and challenges.

"Looking to the future, the digital RMB still faces the following challenges. First, customer experience and acceptance, whether it can be truly used; second, the security and efficiency of the digital RMB system, whether it can support the use of 1.4 billion Chinese people; third, whether the digital RMB can give full play to its natural characteristics of facilitating cross-border payments and be used abroad." said Zou Chuanwei.