Recently, the people’s Bank of China held a 2020 work conference, at which the central bank pointed out that in strengthening the R & D and application of financial technology, it stressed the need to continue to promote the R & D of digital currency. The deputy governor of the central bank recently said that the central bank’s digital currency DCEP adheres to double-layer delivery, standard setting, function research and development, joint commissioning and testing, etc. In the next step, we will follow the principles of stability, safety and controllability, reasonably select pilot verification areas, scenarios and service scope, continuously optimize DCEP functions, and steadily promote the introduction and application of legal tender in digital form.
In the “inventory of the central bank’s 2019 financial technology”, the central bank also said that it had basically completed the top-level design, standard formulation, function research and development, joint commissioning and testing of legal digital currency on the premise of adhering to double-layer operation, M0 (banknote and coin) substitution and anonymity. Solidly carry out research on digital currency and track and study the international cutting-edge information of digital currency.
In this regard, let’s first talk about the current situation and the importance of issuing DCEP:
1. At present, the US dollar is the only currency linked to gold, so its importance is self-evident, and the status of the US dollar has consolidated the superpower and hegemonism of the United States.
As the second largest currency in the world, the euro was once regarded as a strong enemy of the US dollar, but the EU is composed of many countries, which is doomed that the euro can not really compete with the US dollar.
However, with the development of China and the fact that China is the most populous country in the world, China’s RMB has become the largest competitor to the US dollar. In addition, Libra, which Facebook planned to launch before, with a strong audience, is also a new challenger to the US dollar. Therefore, the importance of pushing digital currency in China is self-evident.
2, in addition, it is now a fast-paced world, and the success of Alipay and WeChat payment illustrates this point. Therefore, the introduction of legal digital currency by the central bank can promote the convenience of domestic payment.
In addition, the global banking financial Telecommunications Association is also an international settlement network dominated by US dollars. If the United States excludes China from this association, it will cause great losses to China. Although it is not good for the United States, it is not wrong to take precautions.
3. Currency diversification is the general trend and cannot be changed.
4. Libra is also constantly adjusting its strategy. If it wants to go public, it needs to be cross examined by Congress, but the United States will not let it appear so easily. The most likely way to go public is to combine the US dollar with it, which will strengthen the US dollar’s leading position in the world, which is unfavorable to international development. Therefore, China’s introduction of digital currency will help to obstruct the United States.
Next, it briefly explains the positioning of digital currency.
With regard to the positioning of DCEP, the central bank recently said that it is not a simple substitute for paper money, but to replace the cash in circulation, that is, the sum of the cash on hand of various units outside the banking system and the cash held by residents. DCEP is also different from Alipay, which does not need to bind any bank card.
DCEP has a two-tier operation system, in which the first tier is the people’s Bank of China to commercial banks, and the other tier is commercial banks or commercial institutions to citizens. In other words, when DCEP is issued, the people’s Bank of China will first issue DCEP to the business library of commercial banks, and then commercial banks will provide DCEP access and circulation services to the public. In this way, commercial banks will work with the people’s Bank of China to maintain the normal operation of digital currency.
Moreover, another important feature of DCEP is that it can pay offline! That is to say, in the case of disconnecting the network, you can also make transfer payments, which neither Alipay nor WeChat can do. This can greatly avoid the embarrassing state of the network, the embarrassment of loading out the payment pages, or the conflict that suddenly breaks the net but wants to buy things.
And what needs to be corrected is that DCEP is not the same concept as Alipay and WeChat. The latter two represent the electronic payment, while DCEP still uses the deposit in the commercial bank to make direct payment.
DCEP is centralized!
It should be noted that DCEP is a sovereign credit currency, that is, DCEP is different from virtual price currencies such as bitcoin and Libra, and it is different from the idea of “currency is not a country”.
Virtual currencies such as bitcoin are more like a private currency without a solid credit foundation. However, DCEP has a solid foundation. It is like our country’s paper money. Although it has no value, it can replace the function of money, because it has the support of national credit and is mandatory and legal. Bitcoin lacks a central regulation mechanism, which is not only difficult to meet the requirements of monetary policy, but also unable to maintain the stability of the currency value. The sharp rise and fall of its currency value in recent years has proved this. (therefore, bitcoin and other virtual currencies are only investment products)
Then put another way, the only substitute for DCEP is paper money, while the substitute for virtual currency such as bitcoin can be any item with the same value.
So it seems that the emergence of DCEP is good for both the country and the people, but it can’t be “fried”!
Responsible editor; zl