The digitalization of the RMB will be an inevitable trend, and three major misunderstandings should be eliminated

Recently, the central bank released the 2017 recruitment information for its subordinate units, showing that the central bank's Printing Science Research Institute plans to recruit six professionals with master's or doctoral degrees to carry out digital currency research and development this year, which indicates that China's digital currency research work will be fully launched.

The earliest use of paper money in my country can be traced back to the Northern Song Dynasty, that is, the "Jiaozi" printed in Sichuan in 960 AD, the first year of Jianlong in the Northern Song Dynasty, which is less than 1,100 years old; the dynasties after the Northern Song Dynasty also mainly used precious metals such as silver, gold, and copper as monetary media. During the Qingming, Beiyang government and the Republic of China period, the number of paper money issued gradually increased, but it could not completely replace paper money. On the one hand, the inconvenience caused by paper money printing technology and circulation damage made it difficult to issue paper money on a large scale; on the other hand, the public's currency usage habits have long preferred precious metals, and concerns about the existence of paper money cannot be eliminated.

Obviously, the transition from precious metals to paper money replacing precious finance as the medium of money, and then to digital money in the future, is an inevitable product of economic development to a certain stage; and with the increasing development of network communication technology, the increasing frequency and activity of social transactions, and the changes in people's shopping habits and the consideration of the security of currency circulation, people are increasingly inclined to use electronic banking and electronic payment instead of carrying paper money. The central bank provides a digital currency medium tool that is faster and cheaper than paper money, which is necessary to adapt to the economic development of the times. It can be predicted that the paper money in circulation on the market may decrease with this trend, and the paper moneyization of currency is still the general trend.

At the same time, the digitalization of currency can better play the advantages of transactions and media, and will have an important and far-reaching impact on future social and economic activities:

(1) Digital currency can reduce the high cost of issuing and circulating traditional paper currency and improve the convenience and transparency of economic transactions;

(2) It can reduce illegal and criminal activities such as money laundering and tax evasion, enhance the central bank's control over money supply and money circulation, better support economic and social development, and help achieve comprehensive inclusive finance;

(3) The establishment of a digital currency issuance and circulation system in the future will also help my country build a new financial infrastructure, further improve my country's payment system, enhance payment and clearing efficiency, and promote economic quality, efficiency and upgrading;

(4) The digitalization of currency will also help my country’s anti-corruption efforts in the economic field, placing greater constraints on acts such as embezzlement and bribery.

Of course, in addition to a series of positive economic impacts, the digitalization of currency will also bring other impacts: for example, it will lead to a further reduction in the number of bank employees, the closure of existing printing plants and a reduction in the number of mint employees, and it will bring some inconveniences to the economic life of people who have low cultural levels and lack the ability to operate digital currencies.

However, in order to eliminate obstacles to the issuance and circulation of digital currencies in the future, three misunderstandings should be eliminated:

1. Eliminate concerns that the issuance and use of digital currency will cause the existing RMB value to depreciate.

Digital currency mainly refers to the form of currency. The scale of currency issuance is still controlled by the central bank. As for whether to issue paper currency or digital currency, it is only a change in form and will not cause currency shrinkage, so the public does not need to worry about it.

2. Eliminate concerns about confusion between digital currencies and electronic payments such as Alipay, WeChat, and other digital currencies such as "Bitcoin" and "Litecoin".

Central bank digital currency is a legal tender issued by the central bank, encrypted, and backed by national credit. There is a fundamental difference between other electronic payments and digital currencies; "Bitcoin" is just a virtual currency that can only be purchased with real money and cannot be converted into real money; and these digital currencies have no centralized issuer, and anyone can participate in the production and global circulation. Therefore, the whole society does not need to worry about this.

3. Eliminate the concerns that may cause inconvenience to buying and selling transactions and shopping for the general public.

Because currency digitization is a long process, paper money will not be completely eliminated in the short term, so digital currency and paper money will coexist and circulate for a long time. For ordinary people, when they go to the bank to withdraw money in the future, they can choose to exchange physical cash or digital currency, which will not affect their daily economic life.