1. Overview of Digital RMB
Digital RMB, also known as the central bank digital currency, DC/EP, e-CNY, is a digital legal currency issued by the People’s Bank of China. It is operated by designated operating agencies and exchanged with the public. It is supported by a broad account system based on The loose coupling function of bank account is equivalent to banknotes and coins, has value characteristics and legal compensation, and supports controllable anonymity.
The above definition can be understood from four levels:
(1) From the perspective of currency positioning, digital renminbi is issued by the People’s Bank of China. It is a legal currency equivalent to banknotes and coins. It is positioned as cash in circulation (M0) and belongs to the category of basic currency, and its legal status is the same as that of cash. ；
(2) From the perspective of issuance management, the digital renminbi is issued centrally by the People's Bank of China, and the designated operating agency is responsible for the operation and exchange services of the digital renminbi, and achieves controllable anonymity. It is a hybrid central bank digital currency under a two-tier operating system;
(3) From the perspective of application customers, digital RMB is issued to the public and can be widely used in various daily transaction scenarios of individuals and enterprises;
(4) From the perspective of payment, the digital
It exists in form, has its own value, and uses national credit as a guarantee to support loose coupling of bank accounts. Therefore, digital renminbi can be used as a digital payment method and support anonymous transactions to a certain extent. The digital renminbi is launched using the same "central bank-commercial bank" dual model as banknotes, that is, a "two-tier operating system". The so-called two-tier operation system, as shown in Figure 1-1, can be roughly divided into the distribution layer and the circulation layer. The distribution layer needs to solve the "how to send" problem, and the circulation layer is the "how to use" problem. The problem.
2. How to send digital renminbi
The main body of the investment layer includes the People's Bank of China and designated institutions (currently six state-owned banks of Industry, Agriculture, China, Construction, Transportation, and Postal Savings), which mainly solve the problem of "how to issue" in order to realize the definition of digital renminbi mentioned above The first two levels-currency positioning and issuance management. Digital RMB is positioned at M0 and is issued and managed by the People's Bank of China. On this basis, it is necessary to clarify the basic framework of issuance management, that is, the question of "what to use". As a liability of the central bank, designated institutions (usually commercial banks) need to pay 100% of the total reserve to the central bank, and the central bank will issue digital renminbi to the designated institution, and the designated institution will provide the public with digital renminbi exchange services (also known as “Agent placement”, designated agencies are also called “agent placement agencies”); at the same time, in order to achieve centralized management and controllable anonymity of digital RMB, payment data is not completely managed by the circulation layer, and agency placement agencies need to trade daily The data is asynchronously transmitted to the central bank, and relevant institutions also need to report to the central bank on large and suspicious transactions in digital renminbi in a timely manner, so that the central bank can master the necessary transaction data to implement supervision and anti-money laundering. This requires the central bank and designated commercial banks to form a corresponding digital renminbi management system, and implement functions such as confirmation of rights registration, identity authentication, and transaction supervision, that is, to build a central bank digital currency core system of "one currency, two banks, and three centers" (see Table 1-1).
Figure 1-2 is a reference prototype, which shows the general structure of central banks and commercial banks for the central bank's digital currency. The launch, withdrawal, and traceability of digital renminbi must revolve around the core system of "one currency, two banks and three centers" get on
Furthermore, the delivery layer also needs to solve the problem of "how much to send". When the data is properly desensitized, the central bank can use big data and artificial intelligence technology to conduct detailed analysis on the issuance and circulation of digital renminbi, understand the specific operating rules of the currency system, and provide for precise control of the amount and frequency of currency Data support can also better meet the intervention needs of monetary policy, macro-prudential supervision and financial stability control. This is also an important significance of digital renminbi issuance. To sum up, to solve the problem of "how to send" is to answer "what to send" and "how much" through a series of designs. To implement the above design, multiple functional modules are required, such as transaction communication modules and intelligent calculations. Modules, security assurance modules, etc., Figure 1-3 shows the preliminary framework, and each module will be further explained later.
3. How to use the digital renminbi
"How to send" is a problem that needs to be solved by the distribution layer, which is more considered from the perspective of the central bank, while "how to use" is a problem closely related to the public, mainly by the designated operating agencies of the circulation layer and other third-party commercial institutions Responsible for market-oriented design and operation, and ultimately serve the public and real economy industries. . Designated operating institutions currently mainly include commercial banks (not limited to banks designated by the central bank to exchange digital renminbi), mobile phone operators, payment institutions, etc. In the specific operation process, operating agencies need to assume five responsibilities: 1. Promote the use of digital renminbi and provide the public with diversified payment services; 2. Operate within the scope of legal compliance, make reasonable capital allocations, and reduce Financial risks in the payment system; third, as the main body of anti-money laundering, it is necessary to fully contact and understand customers and report abnormal transactions in a timely manner; fourth, to protect customer privacy, and only disclose data to the central bank, the only third party; fifth, to implement equipment in terms of technology The transformation and maintenance of the equipment.
The public is more concerned about "why use it" and "how to use it". The following is an explanation of these two issues. First of all, why use a digital renminbi? It can be explained by comparison with other payment methods. As shown in Table 1-2.
With reference to the research conducted by the Federal Reserve and the Institute of Financial Technology of Renmin University of China, various payment methods can be further quantified from the seven dimensions of operational efficiency, payment convenience, and anonymity, as shown in Table 1-3 below (each full score is 5). Minute).
A further comparison of the evaluation results shows the advantages of digital renminbi: Compared with cash, digital renminbi effectively improves transaction convenience, security and operational efficiency on the basis of ensuring the credit rating and the availability of payment services; For third-party payment, digital renminbi effectively reduces the potential risk of default and improves the inclusiveness of payment. However, the related equipment has not yet been transformed. Due to the network externalities of payment services, third-party payment is still a lot. The first choice for people to pay; compared with the current digital currencies that have attracted much attention-Bitcoin and Libra, the legality of the digital renminbi is the biggest difference, which can ensure the safety and convenience of transactions and maintain the stability of value.
Secondly, "how to use it", it is necessary to clarify the payment method of digital renminbi, that is, how the public uses it. Zhou Xiaochuan, the former governor of the People’s Bank of China, said that the current central bank’s technical solution for digital currency electronic payment,
There are mainly the following five types:
One is an account-based electronic wallet that can support short-range and remote transactions;
The second is the barcode payment scheme, including the QR code payment that is now widely used;
The third is to use NFC (standard near field communication) for short-range contact transactions, similar to ApplePay, Huawei Pay, etc.;
Fourth, bank cards in mobile phones, including credit cards and UnionPay QuickPass paid through POS machines, QR codes or NFC;
Fifth, prepaid cards, such as Hong Kong's Eight Datong electronic toll collection system based on IC cards.
From the point of view of payment methods in the pilot process, "scanning" and "touching" are the main two short-distance payment methods. "Scan" uses the widely used QR code payment solution, which is a short-range online payment method. Users can use the digital RMB APP to scan the merchant's QR code or show the payment code to complete related payments easily and quickly.
"Touch" is a short-range payment method using NFC technology, which can be done online or offline, but requires a digital RMB hardware wallet to be installed on the mobile phone. (On October 30, 2020, according to the official Weibo of Huawei Terminal, Huawei Mate40 series is the first smart phone that supports digital RMB hardware wallet.) In the online situation, POS machines or dedicated chips can be used for payment, as shown in Figure 1- 7. The user opens the digital renminbi APP, taps the setting interface to open the NFC, and uses the mobile phone to gently "touch" the sensing area of the merchant's POS machine to realize the payment; Figure 1-8 shows the payment scenario of the chip sensing area.
In the offline state, “touch” can still be carried out between the two parties who have installed the hardware wallet. The user opens the digital people’s wallet and slides to pay, selects the payment method of “touch”, and clicks the setting interface to open the NFC. At the same time, the merchant Also open the personal digital renminbi wallet, slide down the collection, and also select "touch" and set the collection amount to complete the payment.
The remote payment method is very similar to the online payment process that the public is accustomed to. Users need to create a sub-wallet in the digital renminbi wallet, choose to push the sub-wallet to the specified APP, then open the corresponding APP, select the goods they want to buy, and then pay Select "Digital RMB" in the options to complete the online payment.
In order to support this payment method and build a suitable financial system around these payment methods, circulation institutions must make corresponding technological changes. Including bank core systems, databases, POS machines, etc., business processes in related industries will also change. For example, the credit investigation industry can use more detailed transaction data approved by the central bank to provide the credit industry with more reasonable user credit assessments. The specific modification content can be divided into four parts: security assurance module, system modification module, transaction terminal module and payment technology module.
Fourth, the characteristics of digital renminbi
In summary, we can summarize the characteristics of digital renminbi as follows. First, as a kind of central bank digital currency, digital renminbi has legal, digital, and basic properties as a currency; secondly, the People’s Bank of China is at the top-level design level. Position the digital renminbi as a partial replacement for M0 and adopt a two-tier operating system for issuance; finally, based on the actual payment system, combined with the needs of regulators, operators and the public, we have successively determined dual offline payments, hierarchical limits, technology neutrality, etc. Features. These characteristics together constitute the overall design of the digital renminbi, so that the digital renminbi can meet the demands of all parties as much as possible and better serve the social payment system.
