Application of Big Data Analysis in Digital Currency

In recent years, science and technology, especially network communication technology, have been widely used, promoting the continuous innovation of financial business. As the issuer of sovereign currency, the central bank closely follows the innovative development of financial business, and uses new technologies to promptly launch the research and development and application of central bank digital currency, which is conducive to promoting the electronic development of cash business and reducing the issuance and use of physical currency. The issuance of digital currency can be based on the current dual system ( "central bank-commercial bank") to achieve release and withdrawal, or it can be directly released and withdrawn by the central bank to the public. Different models have different usage environment construction. Taking into account the actual situation of China's vast territory, large population, and large economic scale, the author intends to explore the use environment construction of the central bank digital currency after issuance under the dual system in accordance with the current ideas of the central bank's currency release, use and withdrawal practices, and provide decision-making references for China to carry out the forward-looking application of the central bank's legal digital currency.

Construction of the central bank digital currency usage environment

Main tasks and principles

The issuance and withdrawal of physical currency by the traditional central bank is based on the current binary system (see Figure 1 ). The issuance and withdrawal of digital currency is still based on the binary system, but the transportation and custody of currency have changed (see Figure 2 ). From the perspective of transportation, physical transportation has become electronic transmission; from the perspective of storage, the central bank's issuance library and the banking institution's business library have become cloud computing spaces for storing digital currency; after banking institutions put cash into the circulation field, the medium for the public to hold circulating currency has changed from physical cash to digital currency.

After the issuance of digital currency, an important issue is how to ensure the smooth circulation of digital currency. From the perspective of the distribution channels, it involves the vast number of individuals receiving wages and bonuses paid by units, and involves the vast number of units and individuals using digital currency for daily production and life purchases. From the perspective of the return channel, it involves units and individuals depositing digital currency to banks, etc. Therefore, the key link in the construction of the digital currency use environment lies in the distribution channels of digital currency. The main task is to design and lay out the acceptance environment for digital currency, especially the acceptance environment for using digital currency to purchase goods or services, including how units and individuals can conveniently withdraw (deposit) digital currency from (to) banks, how units and individuals can conveniently use digital currency to purchase goods or services (hereinafter referred to as "procurement scenarios"), and how units and individuals can conveniently transfer digital currency for non-procurement payments (hereinafter referred to as "non-procurement scenarios").

Considering that digital currency represents national credit, whether it can be used conveniently affects the reputation of the government. Therefore, the construction of the acceptance environment for the use of digital currency should follow the principle of "safety and efficiency, no refusal to use, and zero marginal cost for users". The so-called "safety and efficiency" means to ensure that the use of digital currency as the national legal tender is simple, convenient and reliable, and to ensure the smooth circulation of legal tender; "no refusal to use" means to make it clear from the system that digital currency is legal tender, and units and individuals cannot refuse to accept and use digital currency, to ensure the mandatory nature of the use of digital currency, and to maintain the national credibility; the so-called "zero marginal cost for users" means that the use of digital currency is the same as the use of current cash. In addition to the configuration of mobile terminals and other equipment, there is no cost, and no cost sharing is accepted from any unit or individual, especially from merchants who accept the use of digital currency.

Basic conception of the central bank’s digital currency usage environment

Under the dual system, according to the construction idea of ​​the hierarchical central bank digital currency system, the central bank and banking financial institutions need to build a digital currency system. Through the connection between the banking institution system and the central bank system and related command operations, the central bank digital currency issuance fund is transferred to the digital currency system of the banking financial institution, or the digital currency is returned to the central bank system by the banking financial institution system to realize the storage operation. In terms of business design, it is necessary to ensure strict procedures and smooth processing; in terms of technical arrangements, the technical management of the hierarchical digital currency system of the central bank and banking institutions must not only comply with the information system level protection management regulations, but also meet the country's future key information infrastructure protection requirements.

When the public deposits and withdraws digital currency, they can do so at the bank counter or at a modified self-service terminal, that is, with the help of a dedicated counter or self-service terminal, the applicant's bank account balance can be increased or decreased, and the digital currency balance can be increased or decreased according to the application of the digital currency deposit and withdrawal applicant. They can also use a mobile phone APP or a computer to log in to the bank's website to complete the deposit and withdrawal of digital currency by themselves. Whether through a bank counter or remotely over the Internet, the security management of dedicated counter terminals and digital currency mobile storage terminals is very necessary.

When the public uses digital currency to pay for purchase scenarios, merchants are required to accept the use of digital currency and facilitate the transfer of digital currency between buyers and sellers. At this time, it is necessary to strengthen the security management of special acceptance terminals, including strict production of terminals, deployment and inspection by qualified institutions, etc. The transfer of digital currency between units and individuals due to non-purchase scenario expenditures can be compared with the practices in the purchase scenario. For payments between individuals in non-purchase scenarios, it is necessary to fully consider the actual situation of the wide range of application points of the scenario and create a variety of business implementation conditions, such as adopting a model such as "docking equipment (exclusive mobile phones of both individuals, bank branch counters, self-service terminals) + digital currency mobile storage terminals of both individuals".

The impact of central bank digital currency on the current payment system

Enrich the retail payment options for the public. Current payment tools include cash payment tools and non-cash payment tools. Digital currency, as an electronic application of current cash, is used in parallel with current cash. Therefore, the introduction of digital currency has made cash payment tools into two categories: physical cash payment tools and digital currency payment tools; digital currency circulates in electronic form, which is equivalent to a non-cash payment tool issued by the central bank, thus enriching the payment tool system and increasing the convenience of the public in handling daily payment business.

Form a strong alternative to retail payment options. Digital currency is the same as physical cash in terms of function, and can significantly reduce the costs of issuing, transporting, storing, and checking physical cash in terms of efficiency. Therefore, after the public widely uses digital currency, it is expected to be a good substitute for the use of physical cash. As pure electronic cash, digital currency has a strong national credit support compared to other non-cash payment tools. Therefore, under the condition of equal convenience, digital currency will have a strong alternative, attracting the public to choose to use digital currency more.

The goal of promoting the application of non-cash payment tools will be repositioned. Under the traditional use of physical cash, the goal of promoting non-cash payment tools is to reduce the use of cash and reduce social costs; to accelerate the use of funds and improve the efficiency of fund use. The introduction of digital currency will endogenously reduce the use of traditional cash and ease the goal of promoting non-cash payment tools to a certain extent. The purpose of promoting non-cash payment tools will be repositioned: mainly to accelerate the use of funds and improve the efficiency of fund use, supplemented by reducing the use of cash and reducing social costs.

Supporting work for the construction of the central bank's digital currency usage environment

Organizational guarantee. The construction of the central bank's digital currency application is a huge social project, involving a wide range of areas, heavy tasks, and a wide range of impact, which requires strengthening organizational leadership. It is recommended to establish a leadership group for the construction of the use environment with the People's Bank of China as the lead unit, and relevant departments and banking financial institutions participating, to strengthen overall coordination, unify thinking, improve awareness, clarify division of labor, sort out the order, and steadily advance the construction work as planned.

System construction. In the long run, the construction of the central bank's digital currency application system should form a regulatory system with digital currency regulations, digital currency management methods, and business and technical supporting operation systems as its content, and laws, regulations and normative documents as its expression. In the construction of the use environment, in terms of business, it is necessary to issue digital currency business management methods, digital currency business accounting procedures, and digital currency acceptance environment construction guidelines; in terms of technology, it is necessary to issue digital currency system operation management methods and system and terminal technical specifications to ensure smooth business processing and stable application after the digital currency is put into production.

Publicity and training. First, do a good job in popularization and publicity. In the early stage of promotion and application, strengthen the popularization and publicity of digital currency, introduce the access, use and custody of digital currency to the public in popular language, enhance the public's interest and willingness to use it, and improve their usage skills and risk prevention awareness. Second, do a good job in professional training. Carry out professional training on digital currency application for branches of the People's Bank of China, banking institutions, and relevant non-bank payment institutions to ensure the provision of digital currency services and the protection of the rights and interests of the public during use.

Policy support. The application of central bank digital currency will be a national project of great significance, involving many tasks such as system development, hardware production, and application environment construction. It will inevitably form huge government expenditures, so it requires strong support from relevant national departments. First, financial support will be provided to the People's Bank of China, banking institutions and related institutions for the development of digital currency systems, as well as banking institutions and related institutions for the transformation of acceptance terminals to improve funding security capabilities. Second, for the majority of units and individuals that provide goods and services to the society, because they accept the use of digital currency, appropriate tax exemptions or preferential treatment can be given to mobilize their enthusiasm for accepting digital currency and promote the widespread use of digital currency.

The author is Director of the Payment and Settlement Department of the People’s Bank of China