Babbitt Exclusive | The central bank's digital currency internal testing is in progress, the four major demands accelerate the landing of DC / EP

On the evening of April 14, an internal test photo of the central bank digital currency DC / EP wallet went crazy on the social platform. The test page shows that the digital currency wallet has DC exchange (management of directed funds), DC query (record each transaction in real time), wallet management, wallet attachment (associated account) module, supports scan code payment, remittance, payment collection, "touch "One touch" and other functions. It is reported that the beta version of the wallet is limited to customers in the whitelist, and the downloaded QR code exposed by the media can no longer be opened.


The beta wallet app includes four outlets in Shenzhen, Xiong'an, Chengdu, and Suzhou. Screenshots show that some merchants in Taikoo Li, Chengdu have taken the lead in piloting DC / EP. According to another report from Caijing, the first batch of DC / EP pilot institutions will include the four major state-owned commercial banks of China, China, Agriculture and China, and the three major operators of mobile, telecommunications and China Unicom.


These are all gossip messages circulating on social media, and officials are currently silent on this. But on the 10th of this month, Zhou Xuedong, director of the Central Bank's General Office, also pointed out at the first quarter financial statistics data conference that the central bank's digital currency is proceeding in an orderly manner according to the original plan.

History node

The Central Bank's Digital Currency Electronic Payment (DC / EP) is endorsed by the People's Bank of China, which is essentially the central bank's debt to the public and has unlimited legal compensation. DC / EP is designed to replace the paper currency in circulation, namely M0, which is different from Alipay, WeChat Pay and other third-party payment platforms. From the perspective of time, the birth and development of central bank digital currency has a clear historical context.

DC / EP research originated from Bitcoin

In 2014, under the initiative of the then Governor of the People's Bank of China, Zhou Xiaochuan, the Central Bank established a digital currency research group to start the central bank's digital currency research and development work. The original reason for the research was undoubtedly Bitcoin, because in August 2013, the German government officially recognized the legal “currency” status of Bitcoin and became the first country in the world to recognize Bitcoin. The Chinese government immediately expressed different opinions and issued the "Notice on Preventing Bitcoin Risk" in the same year 12 years, which clarified that Bitcoin does not have the legal status equivalent to currency and cannot and should not be used as currency in the market.

Since then, the central bank has begun to pay attention to the possible impact of blockchain technology on the financial and monetary system. In 2015, a series of research reports on the issuance of digital currency by the People's Bank of China showed that the prototype plan of the central bank to issue legal digital currency has completed two rounds of revisions. Zhou Xiaochuan also revealed in an exclusive interview with Caixin Weekly in 2016 that the People's Bank of China has thoroughly studied other related technologies related to digital currency, such as blockchain technology, mobile payment, trusted and controllable cloud computing, cryptographic algorithms, security chips, etc. Wait. He also pointed out that digital currency must be issued by the central bank as fiat currency, and blockchain is an optional technology.

Stop lag for countering Libra restart

The research speed of the first stage was relatively slow. Until the end of 2016, the Digital Currency Research Institute directly under the Central Bank was formally established, with Yao Qian as the director. In 2016-2018, the core period of the central bank's digital currency research began, and 74 patents were applied for. Subsequently, research on digital currencies seemed to be stalled. After Yao Qian took over as general manager of China Securities Depository and Clearing Co., Ltd. in October 2018, the post of director of the Central Bank Digital Currency Research Institute has been vacant for 11 months, and the Central Bank Digital Currency Research Institute has never applied for a patent.

Unexpectedly, the Libra white paper was born in June 2019, and Mu Changchun, deputy director of the Central Bank's Payment Department, took office immediately and became the second director. Since then, we have heard official references to the central bank's digital currency frequently. Zhou Xiaochuan, Yao Qian, Mu Changchun, Huang Qifan, and Zhou Xuedong all shared the latest progress of the central bank's digital currency in their external speeches, and many substantial landing measures have also emerged. It can be speculated that the direct cause of the central bank's digital currency from cold to accelerated is Libra's potential threat.

Less than a month after the Libra white paper was issued, Zhou Xiaochuan expressed his opinion on the internationalization of Libra and RMB in the "SAIF-CAFR Lecture Hall": "Libra is a challenge to the RMB. At present, China still has a certain degree of foreign exchange control, which must be addressed The challenge for Libra is to speed up the convertibility of capital items and make the RMB a strong currency without erosion and substitution; with the development of RMB internationalization and the gradual expansion of its share in the SDR basket, it will involve very important Policy choice. "

Current motivation

The aforementioned is the historical cause and development context of the birth of the central bank's digital currency, and we have noticed that the recent implementation of the central bank's digital currency has accelerated significantly. The global financial crisis and challenges in the context of anti-epidemic disease may be a booster. Central bank digital currency has at least 4 practical needs at the moment.

1. Improve the accuracy of monetary policy operations

In order to restore market confidence, the Fed had previously cut interest rates on a large scale, and launched unlimited quantitative easing plans and other "drainage packages", and other countries have also reacted one after another. The joint defense mechanism of the State Council of China held a press conference on April 3, and the relevant heads of the three ministries and commissions of the Ministry of Finance, the Central Bank, and the Banking and Insurance Regulatory Commission responded: "We will never let the market have a" money shortage, "and of course, money should not change Mao ', the growth rate of M2 and social financing scale basically matches the growth rate of nominal GDP and is slightly higher. "

The use of digital currency may help the central bank to improve the accuracy of monetary policy operations and make more accurate calculations of the factors such as the supply, structure, circulation speed, currency multiplier, and temporal and spatial distribution of money. Yu Bo, co-founder of Dream Catcher Fund, pointed out: "For fiat currency, the slogan of" de-cashification "of private payment instruments and the rise of" decentralized "digital currency are more like a Morning Call. Therefore, awakening the central bank should pay attention to the stability of fiat currency value, awakening the central bank cannot ignore the inevitable technological wave of digital cryptocurrency, and awakening the central bank should pay attention to the integration and innovation of central bank currency and digital technology. "

2. Become a "special fund" that can be controlled throughout

At the ninth meeting of the National Development and Reform Commission's research on the new digital infrastructure project, more than 10 experts and scholars judged: "In the later stage of the anti-epidemic period, the central bank's digital currency may be accelerated to become a special special fund that can be controlled throughout the process." Trust CEO Ma Chenyun also said: "The programmable attributes of digital currency can be defined, targeted, and used in advance to prevent funds from flowing to real estate and other places that countries do not want to go." From this perspective, DC / EP can also be used as a new infrastructure Special funds.

3. A powerful tool for RMB internationalization

Not only is it used as a special fund in China, DC / EP is also conducive to RMB internationalization. The central bank's digital currency adopts the form of loose account coupling, which reduces the dependence of the trading link on the account, thereby bringing the same liquidity and controllable anonymity as cash. OKEx CEO Jay posted on Weibo, “The two-tier operating system can play a very good role in overseeing possible financial crimes. The general public ’s data security and financial security can be assured. It is more meaningful at the moment. Under the spread of the epidemic, globalization has stalled or even retreated. DC / EP will be able to bypass the restrictions of other institutions or financial infrastructure construction and become a powerful tool to help RMB internationalize. "

4. Meet the needs of "contactless finance"

"In addition to the above-mentioned benefits, DC / EP as a paper money substitute can also meet the needs of" contactless finance "at the moment," said Zhu Youping, a researcher at the National Information Research Center. Banknotes often need to go through the entire process of papermaking, printing, cutting, storage, and transportation, and digital currency will be issued, circulated, managed, returned, investment and financing and inter-bank settlement and other links are converted into mathematical operations performed silently in the server The much lower cost also helps meet the demand for contactless payment at the time of the global outbreak.

Core points

DC / EP has started internal testing. This time it's really "ready to come out." What benefits does it have for us? The director of the Blockchain Laboratory of Beijing University of Posts and Telecommunications concisely pointed out five major advantages: forensicity, traceability, sovereign credit, dual offline payment, and directional circulation. If you want to truly understand these five words, I am afraid you still need to understand some of the most basic elements of DC / EP.

1. Is it related to blockchain?

First of all, some people in the industry believe that DC / EP is based on blockchain technology, and some people think that it is not related to blockchain. We do n’t need to be overly excited. This may be related to the early official euphemism. In August 2019, Mu Changchun said in the course that the pure blockchain architecture cannot achieve the high concurrency performance required by retail, so the central bank decided to maintain technical neutrality and did not pre-set the technical route. However, in October 2019, Huang Qifan, deputy director of the China International Economic Exchange Center, said at the "2019 Bund Financial Summit" that the digital currency DCEP launched by China's central bank is a new encrypted electronic currency system based on blockchain technology.

2. Adhere to centralized management

Secondly, although it is also based on blockchain technology, but unlike decentralized digital currencies such as Bitcoin, DC / EP adopts a centralized management system. The central bank maintains its authority and has the highest authority. There are three main reasons for DC / EP's adherence to centralization: one is that it is a strong guarantee of national credit and has unlimited legal compensation; second, centralized management is conducive to the central bank's macro-prudential and currency control functions. Third, the two-tier operating system is conducive to maintaining the stability of the financial system and maintaining the original currency transmission method.

3. Two-tier operating framework

In addition, DC / EP not only does not "decentralize" or even "deintermediates", but uses the two-tier operation framework of the traditional financial system. The so-called single-tier operating system refers to the People's Bank issuing digital currency directly to the public. The DC / EP is exchanged by the People's Bank to banks or other operating institutions, and then these institutions are exchanged to the public, which belongs to a two-tier operating system. The cooperation between the People's Bank of China and other commercial banks and institutions can make full use of resources and diversify the risks borne by the central bank. It can also avoid crowding out commercial deposits and lead to financial disintermediation.

4. Three Centers Collaborate

For the central bank, the biggest change in DC / EP may be the operating framework, which includes three centers: certification center, registration center and big data analysis center. According to the research report of "People's Bank of China's Legal Digital Currency Exploration" published by Huatai Securities Research Institute: "Authentication Center" is responsible for centralized management of legal digital currency institutions and user identity information. It is a basic component of system security and plays an important role in controlled anonymity. effect. Authentication can use public key infrastructure (PKI) or ID-based cryptography (IBC); the "Registration Center" is responsible for ownership registration and pipeline records, including central bank digital currency and corresponding user identity, legal digital currency generation circulation, The entire process of inventory verification and extinction; "Big Data Analysis Center" relies on big data, cloud computing and other technologies to process massive transaction data. Through the analysis of payment behavior and the analysis of regulatory indicators, master the currency circulation process, ensure the security of digital currency transactions, and prevent money laundering and other illegal activities to provide data support for the implementation of macro policies.