Suzhou Xiangcheng digital currency will arrive in May. You need to know these things before using it

Intern reporter Dai Xiaopei Source: Science and Technology Daily

Recently, the progress of the research and development of my country's legal digital currency has attracted widespread attention from the society. According to reports, the digital RMB will first be tested in Shenzhen, Suzhou, Xiong'an New Area, Chengdu and the future Winter Olympics. Staff of district-level agencies and enterprises and institutions in Xiangcheng District, Suzhou City, whose salaries are paid by the four major state-owned banks of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China and China Construction Bank, will complete the installation of the central bank digital currency (DC/EP) digital wallet by the end of April. Starting in May, 50% of the transportation subsidy in the salary will be issued in the form of digital currency.

Since the birth of Bitcoin, many people have been wondering: What impact will digital currency have on our daily lives? To this end, Science and Technology Daily interviewed Dong Ximiao, chief researcher of Xinwang Bank and Zhongguancun Internet Finance Research Institute, and Bi Tongtong, co-founder of financial technology consulting company PANONY, to answer a series of hot issues raised by digital currency.

1. What impact will the application of central bank digital currency have on daily life?

Dong Ximiao: Renminbi (banknotes and coins) is legal tender. According to laws and regulations, no institution or individual can refuse to use the renminbi. Similarly, the central bank's digital currency is legal tender and is a digital version of the renminbi. Merchants cannot refuse to use it, otherwise it will be illegal. In the future, with the implementation of the central bank's digital currency, users' payment options will be richer and more convenient and faster. As the basis of the entire financial activity, a more convenient and faster payment method is conducive to reducing transaction costs and improving financial operation efficiency. In addition, the digital currency system helps to trace transaction dynamics and capital flows, which is conducive to preventing illegal transactions such as money laundering.

Bi Tongtong: The implementation of digital currency will not happen overnight, and there will be a process of popularization. But what is certain is that the issuance and implementation of the central bank's digital currency will further promote the development of China's "cashless society". For the public, the use of "electronic cash" in daily life will increase further. And people in remote areas will more deeply appreciate the benefits of the central bank's digital currency. For example, when the government or institutions issue cash subsidies to individuals, some people may not have bank accounts in the past. With the central bank's digital currency, as long as everyone downloads and registers a central bank digital currency wallet, they can directly receive subsidies issued in the form of digital currency, which can effectively avoid the phenomenon of special funds being misappropriated in violation of regulations.

2. Will paper money be completely replaced?

Dong Ximiao: Digital currency cannot completely replace cash. At least for now, there are still some technical limitations. In addition, due to different user habits, not everyone is used to this payment method. For example, some older people may not accept digital currency.

Bi Tongtong: The central bank's digital currency will not completely replace paper currency in a certain period of time. It will serve as a supplement to the means of payment for people's daily consumption. Moving towards a "cashless society" is a long process, which may take decades or even hundreds of years to truly realize.

3. What are the similarities and differences between the central bank’s digital currency and non-bank payment methods such as Alipay and WeChat?

Dong Ximiao: The central bank's digital currency is legal tender, while WeChat Pay and Alipay are just a payment method, and their effectiveness is different. Specifically, if an institution or individual does not accept Alipay or WeChat payment, there is no problem in law. But it is illegal to refuse users to use cash or digital currency to pay. In addition, the legal currency is backed by the national credit, the bank card payment is backed by the commercial bank credit, and the Alipay and WeChat Pay are backed by the Internet enterprise credit. These three belong to different levels. Compared with non-bank payment methods, the central bank's digital currency is more secure, has a wider range of use, and does not need to be bound to a bank account.

Bi Tongtong: From the perspective of the public, the usage of the central bank's digital currency and third-party payment is similar in terms of experience, and both require mobile terminal devices. However, the assets of ordinary people on Alipay and WeChat are actually a bookkeeping, and these two payment tools are based on commercial bank settlement. Third-party payment tools such as Alipay and WeChat cannot transfer money, but the central bank's digital currency can break the barriers of the payment industry and circulate between supported banks and payment tools. At the same time, WeChat and Alipay are real-name payments, while the central bank's digital currency can meet the public's needs for anonymous payments to a certain extent.

4. Some analysts say that the central bank's digital currency will impact the status of Alipay or WeChat Pay; others believe that Alipay and WeChat Pay have already been used in a wide variety of scenarios, and the launch of the central bank's digital currency may not bring too many surprises. Is this true?

Dong Ximiao: The central bank's digital currency will not have an impact on Alipay or WeChat Pay. The effectiveness of digital currency is not comparable to that of WeChat Pay and Alipay. After the digital currency is officially launched, no matter the amount of payment or the nature of the payment, that is, whether it is the purchase of goods, payment of services, payment of taxes, etc., any payee cannot refuse to accept it. However, in the form of WeChat Pay and Alipay, the payee can freely choose to accept or refuse. Perhaps there will be a possibility that more and more people use the central bank's digital currency, and fewer and fewer people use Alipay and WeChat Pay.

Bi Tongtong: Whether the central bank's digital currency will impact the market position of WeChat Pay and Alipay is a process determined by the market in the long run, but in theory it will not affect the position of Alipay and WeChat Pay. The central bank's digital currency will enter the lives of ordinary people as a supplementary means of payment. It is foreseeable that Alipay and WeChat Pay will also be connected to the central bank's digital currency in the future. The functions of payment tools are more diverse, but the channels and scenarios have not changed.

5. With the advent of the digital currency era, what new problems may emerge?

Dong Ximiao: For the whole society, the application of digital currency can reduce transaction costs, improve financial operation efficiency, and prevent illegal activities such as money laundering. However, it is still in the testing stage, and it will take some time for it to be officially applied or even promoted on a large scale. It will also take some time for everyone to perceive and understand the advantages of digital currency.

Bi Tongtong: The advent of the digital currency era will change the existing social structure and institutional functions to a certain extent. It is obvious that in the future, the printing press may be closed and the number of bank employees, especially ordinary tellers and ATM machines, may be further reduced. In addition, digital currency will also become a new means and cover for fraud by criminals. At present, there are scams in the market that use the central bank's digital currency as a banner to commit fraud, and the central bank has also issued risk warnings many times. These are new problems that need to be faced in the future.

Editor-in-charge: Tang Jing