ChainIDE topic discussion #9 New Progress in China's Digital RMB
New Progress in China's Digital RMB
On July 16, PBOC(the People's Bank of China) released the "White Paper on China's Digital RMB Research and Development Progress" and held a media briefing.
The "White Paper on the Research and Development of China's Digital RMB" describes the current research results of digital RMB. The white paper states that the name of the digital RMB is tentatively designated as e-CNY, and the previous expression of DCEP (Digital Currency Electronic Payment) is no longer used. e-CNY is a legal tender issued by PBOC. e-CNY adopts centralized management and two-tier operation. e-CNY is positioned as a cash payment voucher (M0), and will coexist in physical RMB for a long time. PBOC divides digital renminbi into wholesale central bank digital renminbi issued to commercial banks and other entities for large-value settlements according to users and uses, and retail PBOC digital renminbi issued to the public that can be used for daily transactions.
Cryptocurrencies have limitations such as lack of value support and sharp price fluctuations, making it difficult to perform currency functions in daily economic activities. At the same time, cryptocurrencies are mostly used for speculation, and there are risks that threaten financial security and social stability. Stable coins also bring many risks and challenges to the international monetary system, payment and settlement system, and monetary policy. The white paper clearly states that e-CNY is opposed to cryptocurrency and stable currency.
Mu Changchun, director of the Digital Currency Research Institute of PBOC, stated at the media briefing that according to the top-level design requirements of the digital RMB, the following four requirements need to be met:
To meet the requirements of high retail concurrency and centralized management by the central bank, centralized processing should be adopted at the transaction level.
To promote fair competition and improve regulatory efficiency.
To improve the efficiency of clearing and reconciliation, realize payment is settlement and efficient error handling.
To meet the anti-money laundering requirements while protecting privacy.
Therefore, in the transaction layer of the digital renminbi payment system, in order to support high concurrency and low latency, and to realize the direct holding of central bank claims by the public, a centralized structure is adopted, and all inter-institutional transactions are transferred through the central bank. The digital renminbi expression of the encrypted string retains the characteristics of security, anti-double-spending, and unforgeability. It can also load smart contracts with currency-related functions to promote business model innovation and become a catalyst for digital economic activities.
At the issuance level of the digital renminbi payment system, a unified distributed ledger is constructed based on alliance chain technology. PBOC, as a trusted institution, uploads transaction data to the chain through an application programming interface to ensure that the data is true and accurate. Collective maintenance and multi-point backup of the ledger. In order to fully reflect the advantages of digital renminbi payment and settlement, the digital renminbi system combines the blockchain consensus mechanism and programmable smart contract features to realize automatic reconciliation and automatic error handling. At the same time, using the irreversible feature of the hash algorithm, the blockchain ledger uses hash digests instead of sensitive transaction information to achieve data isolation between different operating institutions, which not only protects the security of personal data privacy, but also avoids the cause of distributed ledger Financial data security risks.
On the other hand, the white paper also stated that digital renminbi realizes programmability by loading smart contracts that do not affect currency functions, so that digital renminbi can conduct automatic payment transactions based on the conditions and rules agreed by both parties on the premise of ensuring safety and compliance to promote business model innovation.
Talk about your understanding of digital RMB
What are the advantages of digital renminbi?
What are the differences between digital renminbi and electronic payment?
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