Everyone is talking about DCEP, what does the central bank's digital currency have to do with you?
On October 28, Huang Qifan announced that the People's Bank of China is likely to be the first central bank in the world to launch a digital currency.
Huang Qifan, academic consultant of the China Finance Forty Forum (CF40) and vice-chairman of the China Center for International Economic Exchanges, delivered a speech at the plenary session of the first Bund Financial Summit "Collision and Integration—The Wave of Digitalization Reshaping the Global Financial Ecology". The interpretation of DCEP explains the views on blockchain, digital currency, cross-border payment and other issues.
Today we will talk about what DCEP has to do with you and how you can use it.
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What does DCEP have to do with us? How can ordinary people obtain DCEP?
1. What is DCEP?
DCEP is essentially a digital payment tool. The full name of DCEP is Digital Currency Electronic Payment, DC refers to digital currency, and EP refers to electronic payment, that is, digital currency and electronic payment tools. Its functional attributes are exactly the same as banknotes, but in digital form.
The DCEP issued by the central bank is positioned as a substitute for paper money, that is, a digital version of paper money. Since DCEP is a substitute for banknotes, the payment scenarios involved in banknotes can also be realized in principle with DCEP. For example, DCEP can complete transactions without a network.
2. What are the benefits of DCEP?
The cost of traditional banknotes and coins is very high in issuance, printing, return, and storage, and it is necessary to invest in anti-counterfeiting technology, and there are many layers of circulation, which is inconvenient to carry. The evolution of currency will inevitably move towards virtualization and digitalization, so in Environmental protection also plays a role. On the other hand, traditional banknotes and coins have more layers of circulation and are not easy to carry, while digital currency is the opposite.
Huang Qifan pointed out that DCEP does not require accounts, which greatly reduces the dependence on accounts in the transaction process, which is conducive to the circulation and internationalization of RMB. At the same time, DCEP can realize real-time collection of data such as currency creation, accounting, and flow, and provide useful reference for currency delivery, monetary policy formulation and implementation.
3. How can ordinary people obtain DCEP?
China's central bank digital currency designedTwo-tier operation delivery systemThe so-called two-tier system refers to the two-tier operating system of the Central People's Bank and commercial banks. The upper layer is the People's Bank of China to commercial banks, and the lower layer is commercial banks or commercial institutions to ordinary people. The specific implementation process is that the People's Bank of China first exchanges the digital currency to banks or commercial institutions, and then these institutions exchange it to the public.
The so-called two-tier system refers to the two-tier operating system of the Central People's Bank and commercial banks. The upper layer is the People's Bank of China to commercial banks, and the lower layer is commercial banks or commercial institutions to ordinary people. The specific implementation process is that the People's Bank of China first exchanges the digital currency to banks or commercial institutions, and then these institutions exchange it to the public.
The specific way is that commercial banks buy from the People's Bank of China, and we go to commercial banks to exchange RMB. This is the two-tier operating model.
ZeroOne Finance pointed out that commercial banks have long-term direct contact with users, which is a great advantage over the central bank. If the central bank and commercial banks work closely together, not only can the existing resources be used to mobilize the enthusiasm of commercial banks, but also the acceptance of digital currencies can be smoothly improved.
4. How do ordinary people use DCEP?
DCEP can complete transactions without a network. Some interpretations say that even if the mobile phone cannot be connected to the Internet, the two mobile phones can transfer money by touching each other, that is, offline payment is supported.
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What is the difference between DCEP and Alipay WeChat?
What are the differences between DCEP, Alipay and WeChat? Is Alipay or WeChat payment the digitization of banknotes?
First, DCEP is a substitute for M0, and Alipay and WeChat are substitutes for M1 and M2.
M0 means that like using cash, there is no need to bind a bank card, and direct point-to-point payment can be made, which is as convenient as sending a message.
You can first understand the concepts of M0, M1 and M2:
M0 refers to the cash in circulation, which is the paper currency issued by the central bank.
M1, referring to money in a narrow sense, is the sum of M0 and demand deposits of non-financial companies.
M2 refers to broad money, which is the sum of M1 and fixed deposits, savings deposits and other deposits of non-financial companies.
M0=cash in circulation
M0=cash in circulation
Money in the narrow sense (M1) = M0 + unit demand deposits that can be paid by checks
Broad money (M2) = M1 + resident savings deposits + corporate time deposits + corporate other deposits + securities company customer deposits
Alipay and WeChat Pay belong to the field of M1 or M2, while the digital currency issued by the central bank focuses on the replacement of M0 currency rather than the replacement of M1 and M2 currency.
At present, M1 and M2 currencies have basically realized electronic and digitalization in China, and various online payment methods supporting M1 and M2 can basically meet the needs of economic development.
Zeroone Finance pointed out that there are still three prominent problems in the M0 currency side: first, the anonymity of the existing M0 makes it risky to be used for money laundering and terrorist financing; second, Internet payment is based on bank The model of tightly coupled card accounts cannot meet the public's demand for anonymous payment; third, there are still areas in my country with poor bank account services and communication network coverage, and the local public's dependence on M0 currency (cash) is still relatively high.
Therefore, the central bank's issuance of a digital currency that focuses on replacing M0 is not only in line with national conditions, but also meets the demand for small high-frequency payments (set transaction limits and balance limits according to different levels of wallets), and can effectively prevent M0 currency from being used for money laundering. and terrorist financing risks.
Second, the settlement institutions are different:Alipay and WeChat Pay use commercial bank deposit currency for settlement, and DCEP uses central bank currency for settlement.
This also means that the stability and security of the two are different. There is only one central bank: The People's Bank of China"s Bank Of China, English abbreviation PBOC). Commercial banks are not stable enough. If the commercial bank goes bankrupt, the "money" in Alipay will become the "bonds" of the commercial company, and the assets of the company will be liquidated in bankruptcy. for you.
Third, Alipay and WeChat are Internet payments, while DCEP can realize dual offline payments.
Even in places where there is no Internet, Alipay and WeChat can no longer be used, but DCEP is still available. Many people think that this is not important. In fact, when shopping in small supermarkets in many places, when scanning codes to pay in underground parking lots, the signal is very strong. Worryingly, this little requirement is important.
Fourth, the purpose of Alipay and WeChat is mobile payment, and the purpose of DCEP is to control the status of legal currency and save issuance costs.
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How is DCEP different from Bitcoin?
Bitcoin is a decentralized currency system, and all values and prices come from consensus. DCEP is the legal currency issued by the central bank of the country. Every dollar is endorsed by the central bank. In China, when you go out to buy things, as long as the banknotes are intact, the other party cannot say that they do not accept RMB.
Huang Qifan explained in detail the difference between DCEP and virtual currencies led by Bitcoin at the first Bund Financial Summit. Huang Qifan believed that the emergence of digital currencies represented by Bitcoin and Libra ushered in the digital age, but "some companies Trying to challenge the sovereign currency by issuing Bitcoin and Libra. This kind of blockchain-based decentralized currency is separated from sovereign credit. The basis for issuance cannot be guaranteed, the value of the currency cannot be stabilized, and it is difficult to truly form social wealth. I do not believe that Libra will succeed.” .
The difference between DCEP and digital currencies such as Bitcoin is that the former has sovereign credit endorsement, while the latter does not have credit endorsement. The essence of the central bank’s digital currency is legal currency. In the legal currency environment, the central bank is not only the decision maker of currency issuance, but also the monetary system. strong endorsement.
According to Huang Qifan's speech, DCEP includes the following characteristics: 1. The value of DCEP is only linked to RMB. 2. DCEP has unlimited legal compensation. The so-called unlimited legal compensation means that no matter the amount paid, the payee cannot refuse to accept it. 3. DCEP can realize value transfer without an account. DCEP does not need to be connected to the Internet, as long as the DCEP digital wallet is installed on the mobile phone, and the value can be transferred by touching each other. 4. High security of assets. DCEP is directly issued by the central bank, and there is no problem of failure of commercial banks and enterprises.
In addition to the source of value, the underlying architecture of DCEP and Bitcoin is likely to be different.
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Besides China, which other countries want to issue central bank digital currency?
The World Bank Group and the International Monetary Fund (IMF) released a report in early July this year. The report pointed out that so far, nearly 70% of central banks are researching Central Bank Digital Currencies (Central Bank Digital Currencies, referred to as CBDC).
According to incomplete statistics from Axonomy, the CBDCs of Ecuador and Uruguay have failed; in addition, 4 other countries including Tunisia, Senegal, Marshall Islands, and Venezuela have issued CBDCs; 7 countries including China are promoting the research and development of central bank digital currency ; There are 3 countries that are researching; but there are also several developed countries including the United States, Russia, Germany, Japan, and the European Union that are temporarily indifferent to the launch of central bank digital currencies.
According to incomplete statistics of public information, the development status of central bank digital currencies in various countries is as follows:
ecuador
ecuador: In February 2015, Ecuador launched the Ecuadorian currency, which is directly supervised by the central bank and maintains a stable exchange rate. However, one year after its operation, the circulation of Ecuadorian currency accounted for less than 0.3/10,000 of the currency volume of the entire economy, and the Ecuadorian currency, which was not used by the public, was announced to cease operation in April 2018.
Uruguay: In December 2017, the Central Bank of Uruguay piloted the world's first legal digital currency project e-Peso (electronic peso). Uruguay’s central bank has decided not to continue using the electronic peso after a six-month pilot for the digitization of the peso and canceled all issued digital pesos.
issued
Tunisia:In October 2015, Tunisia launched a digital currency based on blockchain technology endorsed by the government and the central bank.
SenegalMarshall Islands
Marshall IslandsVenezuela
Venezuela: In February 2018, Venezuela announced the sale of "Petrocoin". The value of Petrocoin is linked to the price of oil. The Venezuelan government hopes that the petro currency can help Venezuela complete economic transformation and ease inflation. The Venezuelan government claims to have raised 6 billion US dollars through the petro currency. However, there is little public information about the petro currency, and it has not been traded in the open market.
Sweden
SwedenUkraine
Ukraine: In February 2019, the Central Bank of Ukraine announced that it had completed the pilot program of the national digital currency "e-hryvnia".
Lithuania:In February 2019, according to Cryptovibes, the Central Bank of Lithuania will issue the central bank digital currency "LBCoin" this year for the purpose of testing cryptocurrency and blockchain technology. According to Marius Jurgilas, a member of the bank's board of directors, it is a commemorative coin issued in limited quantities.
Bahamas:On May 30, 2019, the Central Bank of the Bahamas (CBOB) and transaction provider NZIA.io signed a digital legal tender system development agreement to establish and implement Project Sand Dollar.
Eastern Caribbean:According to news in March 2019, the Eastern Caribbean Central Bank (ECCB) is about to pilot a blockchain-based central bank digital currency (CBDC) and plans to fully launch the currency in 2020.
Uruguay:Thailand
Thailandresearching
researching
Norway: The Norges Bank Norges is studying whether issuing CBDC can bring benefits to customers. Norges has focused his research on issuing CBDC as a supplement to customer cash.
In February, Norges Bank Governor Oeystein Olsen said the central bank could eventually issue a digital currency.
PakistanCanada
CanadaSingapore
SingaporeSweden
Sweden: The Riksbank started working on the e-krona project in spring 2017 in response to years of declining use of cash. According to the central bank's website, the e-krona serves as a digital form of cash that allows the public to obtain cash, allowing the state to guarantee the value of the currency. While "no decision has been made on whether to issue an e-krona", the Riksbank confirmed that it is "continuing to investigate the possibility of issuing an e-krona to increase competitiveness and in this way better prepare for the new digital payments market".
USA
USAEuropean Union
European UnionGermany
GermanyJapan
Japan: The deputy governor of the Bank of Japan, Masaka Amamiya, once said that the Bank of Japan has no plan to issue digital currency in the short term.
Russian RussianIndia
IndiaReferences:
References:
《Central Banks Worldwide Testing Their Own Digital Currencie》
"The Central Bank Issues Digital Currency DCEP"
"Understanding Central Bank Digital Currency in One Article"
