All are talking about DCEP, what is the relationship between the central bank digital currency and you?

Text: Wang Ye

Produced by: Odaily Planet Daily (ID: o-daily)

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 digital currency.

Huang Qifan, Academic Advisor of China Financial Forty Forum (CF40) and Vice Chairman of China International Economic Exchange Center, delivered a speech at the first Bund Financial Summit Plenary Session "Collision and Convergence – Digital Wave Reshapes Global Financial Ecology" DCEP interprets the views on issues such as blockchain, digital currency, and cross-border payments.

Today we will talk about DCEP and what it has to do with you, how can you use it.

Finally, the Odaily Planet Daily also counted, in addition to China, which countries have tried or issued CBDC (Central Bank Digital Currency).

What does DCEP have to do with us?

How do ordinary people get 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, namely digital currency and electronic payment tools. Its functional attributes are exactly the same as paper money, but it is just a digital form.

The DCEP issued by the central bank is positioned as a substitute for banknotes, which is a digital version of banknotes. Since DCEP is a substitute for banknotes, the payment scenario involved in banknotes can also be achieved by DCEP. For example, DCEP can complete transactions without a network.

2. What are the benefits of DCEP?

Traditional banknotes and coins are very costly in the process of issuance, printing, returning, and storage. They also need to invest in anti-counterfeiting technology, and there are many levels of circulation, and it is inconvenient to carry. The evolution of money will be virtualized and digitized. Environmental protection also plays a role on the one hand. On the other hand, traditional banknotes and coins have more circulation levels and are not easy to carry, while digital currencies are the opposite.

Huang Qifan pointed out that DCEP has greatly reduced the dependence of the transaction link on the account, which is conducive to the circulation and internationalization of the 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 the formulation of money and the formulation and implementation of monetary policy.

3. How do ordinary people get DCEP?

The Chinese central bank's digital currency has designed a two-tier operating system , rather than a single-tier operating system in which the People's Bank directly issues digital currency to the public.

The so-called two-tier system refers to the operating system of the two layers of the Central People's Bank and the commercial bank. The upper layer is the commercial bank of the People's Bank, and the lower layer is the commercial bank or commercial organization for the common people. The specific implementation process is that the People's Bank first converts the digital currency to a bank or commercial institution, which then converts it to the public.

Zero Financial pointed out that commercial banks have long-term direct contact with users, which is a great advantage compared to the central bank. If the central bank and the commercial banks work closely together, they can not only use the existing resources to mobilize the enthusiasm of commercial banks, but also smoothly improve the acceptance of digital currency.

4. How do ordinary people use DCEP?

DCEP can complete transactions without a network. Part of the interpretation said that even if the mobile phone can not be connected to the Internet, the two mobile phones can be transferred, that is, support offline payment.

Just like you use cash, others can't see who is using the money. DCEP categorizes the open transaction quota according to the real name. The low degree of certification can be a small transaction, the degree of high certification is relaxed, and the hierarchical management achieves a certain degree of anonymity, which can protect the privacy of ordinary users. In other words, for small-volume use, the wallet only needs to bind the mobile phone number; if you want to increase the transfer limit, you need to perform KYC certification. For example, if you use WeChat change, the accumulated amount exceeds a certain amount, there are additional requirements.

What is the difference between DCEP and Alipay WeChat?

What is the difference between DCEP and Alipay and WeChat? Is Alipay or WeChat payment a digitization of banknotes?

First, DCEP is an alternative to M0, and Alipay and WeChat are substitutes for M1 and M2.

M0 means that like using cash, you don't need to bind a bank card, you can pay directly to peer-to-peer, just as easily 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, which refers to the narrow currency, is the sum of M0 and demand deposits of non-financial companies.

M2, which refers to broad money, is the sum of time deposits, savings deposits, and other deposits of M1 and non-financial companies.

A brief summary of the relationship between the three is:

  • M0 = cash in circulation
  • Narrow currency (M1) = M0 + unit demand deposits that can be paid by check
  • Broad money (M2) = M1 + resident savings deposit + unit time deposit + unit other deposit + securities company customer deposit

Alipay and WeChat payments belong to the M1 or M2 sector, while the digital currency issued by the central bank focuses on the substitution of M0 currency rather than the M1 and M2 currencies.

At present, M1 and M2 currencies have been basically electronicized and digitized in China, and various types of network payment methods supporting M1 and M2 can basically meet the needs of economic development.

Zero Financial pointed out that there are still three major problems in the M0 currency side: first, the anonymity of the existing M0 makes it exist for risk of money laundering and terrorist financing; second, Internet payment is based on banks. The tightly coupled model of the card account can not meet the public demand for anonymous payment. Third, there are still areas in China where bank account services and communication networks are not well covered. The local public is still more dependent on M0 currency (currency).

Therefore, the central bank issued a digital currency that focuses on replacing M0, which is in line with national conditions, and responds to the demand for small-scale high-frequency payment (setting the transaction limit and balance limit according to different levels of wallets), while also effectively preventing M0 currency from being used for money laundering. And risks such as terrorist financing.

Second, the settlement institutions are different: Alipay and WeChat payments are settled in commercial bank deposit currency, and DCEP is settled in central bank currency.

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 (PBOC). Commercial banks are not stable enough. If the commercial bank operates in a bankruptcy, then the "money" in Alipay becomes the "bond" of the commercial company. ", the bankruptcy liquidation of the company's assets, counted as real money, according to the "bond" ratio to you.

Third, Alipay WeChat is an Internet payment, while DCEP can achieve dual offline payment.

It is the place where there is no network, Alipay micro credit is not enough, DCEP is still OK, this is not important for many people. In fact, when shopping in small supermarkets in many places, when the code is paid in the underground parking lot, the signal is very It is anxious that this small demand is very important.

Fourth, the purpose of Alipay WeChat is mobile payment. The purpose of DCEP is to control the status of legal currency and save the cost of issuance.

The above is the basic introduction of DCEP, and the similarities and differences between DCEP and Alipay WeChat Bitcoin. Through these comparisons, we can better understand DCEP.

What is the difference between DCEP and Bitcoin?

Bitcoin is a decentralized monetary system, and all values ​​and prices come from consensus. DCEP is the legal currency issued by the central bank. Every dollar is endorsed by the central bank. In China, if you go out to buy things, as long as the banknotes are intact, the other party cannot say that they will not accept the renminbi.

At the first Bund Financial Summit, Huang Qifan explained the difference between DCEP and Bitcoin-based virtual currency. Huang Qifan believes that the emergence of digital currency represented by Bitcoin and Libra has brought the currency to the digital age, but “some enterprises” Trying to challenge the sovereign currency by issuing Bitcoin and Libra, this decentralized currency based on blockchain is separated from sovereign credit, the issue base cannot be guaranteed, the currency value cannot be stabilized, and it is difficult to form social wealth. I don't believe Libra will succeed." .

The difference between DCEP and bitcoin and other digital currencies is that the former has sovereign credit endorsement, while the latter does not have credit endorsement. The essence of central bank digital currency is still legal currency. In the legal currency environment, the central bank is not only the decision maker of currency issuance, but also the monetary system. Powerful endorsement.

According to Huang Qifan's speech, DCEP can summarize the following four characteristics: 1. The value of DCEP is only linked to the RMB. 2. DCEP has unlimited compensation. The so-called indefinite compensation means that the payee cannot refuse to accept the amount regardless of the amount paid. 3. DCEP does not require an account to achieve value transfer. DCEP does not need to be connected to the Internet. As long as the DCEP digital wallet is installed on the mobile phone, you can achieve value transfer by touching each other. 4. High security of assets. The DCEP is issued directly by the central bank, and there is no problem of commercial banks and corporate failures.

In addition to the source of value, the underlying architecture of DCEP and Bitcoin is likely to be different.
What kind of underlying structure is DCEP issued by the People's Bank of China? There is no public information available yet. Mu Changchun, director of the Central Bank's Digital Money Research Institute, revealed in his speech that when the People's Bank of China Digital Money Research Group first studied the central bank's digital currency, it made a prototype that completely adopted the blockchain architecture, but based on the existing technology, it could not be reached. High concurrency requirements at the retail level. Therefore, in the end, the central bank maintains technical neutrality, does not presuppose technical routes, and does not rely on a certain technology.

In addition to China, which countries are there?

Want to issue a central bank digital currency?

The World Bank Group and the International Monetary Fund (IMF) issued a report in early July this year. The report pointed out that so far, nearly 70% of central banks are studying Central Bank Digital Currencies (CBDC).

According to Axonomy's incomplete statistics, CBDCs in Ecuador and Uruguay have failed. In addition, four countries including Tunisia, Senegal, Marshall Islands and Venezuela have issued CBDCs; seven countries including China are promoting the development of central bank digital currency. Three countries are studying; but several developed countries including the United States, Russia, Germany, Japan, and the European Union have temporarily adopted a cold attitude toward the introduction of the central bank's digital currency.

According to incomplete statistics of public information, the status quo of central bank digital currency development is as follows:

Has failed
  • Ecuador: In February 2015, Ecuador launched the Ecuadorian currency, which was directly regulated by the central bank and maintained exchange rate stability. However, in the one year after the operation, the circulation of Ecuadorian currency was only less than 0.3% of the currency of the entire economy. The Ecuadorian currency that was not used by the public was declared to be out of operation in April 2018.
  • Uruguay: In December 2017, the Uruguayan central bank piloted e-Peso (electronic peso), the world's first legal digital currency project. After a six-month peso digitization pilot, the Uruguayan central bank decided not to continue using the electronic peso and canceled all issued digital pesos.


  • Tunisia: In October 2015, Tunisia launched a digital currency based on blockchain technology endorsed by the government and the central bank.
  • Senegal: In December 2016, Senegal launched the central bank digital currency eCFA, which is also based on blockchain technology and enjoys the same legal status as Senegal's official currency, the African Franc (CFAFranc).
  • Marshall Islands: In February 2018, the Marshall Islands Parliament passed legislation to officially announce the adoption of the ICO by the Marshall Islands to issue a new national digital currency SOV. To avoid inflation, its initial issuance totals 24 million units, and part of its ICO fundraising will be used for health care for about 53,000 citizens.
  • Venezuela: In February 2018, Venezuela announced the sale of “coin coins”. The value of the coins was linked to the price of oil, with a reference price of US$ 60 and a circulation of 100 million. The Venezuelan government hopes that the oil coin will help Venezuela complete its economic transformation and ease inflation. The Venezuelan government has announced that it has raised $6 billion through oil coins. However, there is little public information about oil coins and no trading on the open market.

Positive advancement

  • Sweden: In early 2017, the Swedish central bank Sveriges Riksbank started the “e-Krona” project on the central bank's digital currency, which is planned to be used as a supplement to cash. The Swedish central bank plans to use e-Krona for small transactions between consumers, companies and government agencies.
  • Ukraine: In February 2019, the Ukrainian central bank announced that it had completed its pilot program for the digital currency “e-hryvnia”.
  • Lithuania: In February 2019, according to Cryptovibes, the Lithuanian central bank will issue the central bank digital currency “LBCoin” this year to test cryptocurrency and blockchain technology. According to Marius Jurgilas, a member of the bank's board of directors, this is a commemorative coin with a limited number of issues.
  • Bahamas: On May 30, 2019, the Central Bank of the Bahamas (CBOB) signed a digital fiat money system development agreement with the trading provider to establish and implement Project Sand Dollar.
  • Eastern Caribbean: In March 2019, the Eastern Caribbean Central Bank (ECCB) is about to pilot the blockchain-based central bank digital currency (CBDC) and plans to fully launch the currency by 2020.
  • Uruguay: The Central Bank of Uruguay completed the pilot program for retail CBDC last April as part of a broader government financial inclusion program. The Bank for International Settlements (BIS) stated that the pilot began its release in November 2017, testing electronic peso transfers and transferring money instantly and peer-to-peer through mobile phones using SMS or e-peo applications. But this technique does not use blockchains. Twenty million electronic pesos were issued during the test and all were destroyed after the test. The plan is currently in the evaluation phase before further decisions and potential issuance decisions can be made.
  • Thailand: Bank of Thailand (BOT) has completed the second phase of its CBDC test, called the Inthanon project. Beginning last August, the first phase focused on developing a proof-of-concept Distributed Real-Time Total Clearing System (RTGS) that uses CBDC on distributed ledgers. The second phase, which began in February, has now been completed to further explore how to use DLT in two specific areas. The first area is “the tokenization of BOT-issued debt instruments on distributed ledgers for their lifecycle activities and delivery and payment settlement”, and the second area is “incorporating regulatory compliance and data reconciliation functions into the payment process” And credited to distributed ledgers to increase process efficiency and reduce operational and compliance risks." The bank will soon enter the third phase to try out a “DLT-based RTGS prototype” to extend the system to connect with other systems to support cross-border capital transfer transactions, with coverage and regulatory compliance.


  • Norway: Norwegian central bank Norges is studying whether the release of CBDC will benefit customers, and Norges has focused its research on issuing CBDCs as a supplement to customer cash. In February of this year, Norwegian central bank governor Oeystein Olsen said that the Norwegian central bank may eventually issue a digital currency.
  • Pakistan: The National Bank of Pakistan (SBP) is considering launching CBDC in 2025, and SBP Vice President Jameel Ahmad said the central bank is currently studying the concept of digital currency to promote financial inclusion, efficiency and reduce corruption.
  • Canada: The Bank of Canada's work report pointed out that the introduction of central bank digital currency can bring economic benefits. At present, a key issue for central banks in many countries considering issuing CBDC is whether cash and digital legal currency can coexist. If so, how to maintain the most Excellent monetary policy.
  • Singapore: The Singapore Monetary Authority (MAS) and the Bank of Canada jointly conducted a trial using CBDC for cross-border cross-currency payments. MAS said in May that the central banks of the two countries have linked their respective domestic experimental payment networks, the Jasper project and the Ubin project, which are based on two separate distributed book technology platforms. on. The trial was conducted in collaboration with Accenture and JP Morgan. The former supports the Canadian Corda network, while the latter supports the Singapore Quorum network.
  • Sweden: The Swedish central bank began working on the e-krona project in the spring of 2017 to cope with the ever-decreasing cash use over the years. According to the description of the central bank's website, the electronic krona is a digital form that allows the public to obtain cash, so that the state guarantees the value of the currency. Although “there is no decision whether to issue an electronic krona”, the Swedish central bank confirmed that it “is continuing to investigate the possibility of issuing electronic krona to increase competitiveness and in this way better prepare for the new digital payment market”.

Other country attitudes

  • US: In December 2018, the Federal Reserve said in a report that although they welcomed cryptocurrencies, they did not believe that the central bank should establish a national cryptocurrency.
  • EU: In March 2019, ECB Governor Yves Mersch and Warsaw, Poland, attended the meeting and said that the euro system currently has no convincing motive to issue central bank digital currency.
  • Germany: German central bank governor Jens Weidmann said that the central bank must be cautious when introducing digital currency, as it may undermine the stability of the financial system in times of crisis.
  • Japan: The Bank of Japan’s deputy governor, Yukio Masaaki, said that the Bank of Japan did not plan to issue digital currency in the short term.
  • Russia: Elvira Nabiulina, head of the Russian central bank, said at the Skolkovo student conference that the issuance of digital currency projects belonging to the central bank could not be initiated immediately, but the central bank is considering issuing.
  • India: The Government of India is currently considering a draft cryptographic currency bill entitled “Prohibition of cryptocurrencies and regulation of the 2019 Official Digital Currency Act”. The bill proposes to allow the government to create a digital rupee as the legal tender and to define the digital rupee as "a currency issued by the Reserve Bank in a digital manner, approved by the central government as legal tender."

Reference materials:

Central Banks Worldwide Testing Their Own Digital Currencie

"Central Bank Issues Digital Currency DCEP"

"Reading the Central Bank Digital Currency"

"Huang Qifan: China's central bank is likely to launch the first digital currency in the world (video + full text)"

"I understand the status quo of central banks' digital currency"

"What is the relationship between the central bank digital currency DCEP and our ordinary people? It is here."

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