Digital RMB portrait

  ”Before it came out after a thousand calls”, the digital renminbi finally appeared. As one of the four major pilot cities, Shenzhen issued 10 million digital RMB red envelopes to 50,000 citizens through lottery some time ago.
  However, not long after the digital renminbi was launched, counterfeit digital renminbi wallets appeared on the market. People have lamented: “I don’t know what the real thing is, the fake has already come out.” So, what new thing is the digital renminbi?
  The digital renminbi promoted by the central bank this time is called DC/EP, which is short for “Digital Currency” and “Electronic Payment”, and the Chinese name is “digital currency and electronic payment tools.”
  The function of digital renminbi is not essentially different from that of paper money, but it is to convert paper money from physical objects to digital form. Some people may think of blockchain technologies such as Bitcoin or Libra launched by Facebook. But unlike these virtual digital currencies, the digital renminbi is launched by the central bank and is backed by national credit.
  In addition, digital renminbi also has many advantages such as no interest calculation, no bank account binding, and dual offline payments. Seeing this, as an ordinary consumer, he must still be full of question marks: What is the difference between this and WeChat Pay and Alipay?
  In terms of usage scenarios, the digital renminbi is legal tender and mandatory. A simple example: due to the competitive relationship between WeChat and Alipay, Taobao does not allow WeChat payment, while JD does not allow Alipay to pay. Digital renminbi broke this deadlock, and any merchant must accept the digital renminbi as a payment method. If a merchant refuses, we can choose to call the police.
  In addition, digital currency is more convenient, it does not require an “account”, and the currency is directly linked to the user. There is no need to bind accounts between users, and only need to touch each other with their mobile phones to transfer money, even without the network, and there is no need for WeChat or Alipay to sometimes “cannot scan the code” embarrassment. Although digital renminbi can be used without bank card binding, the premise is that a wallet is required to deposit money. This way of depositing money, according to Shenzhen’s digital renminbi red envelope activity, should ultimately be to download a “digital renminbi” app.
  Mu Changchun, director of the Central Bank’s Digital Currency Research Institute, pointed out: WeChat and Alipay are financial infrastructures and wallets, while digital renminbi is a payment tool and the content of the wallet. “In the era of digital renminbi, the option of digital renminbi has been added to the wallet. In the future, people using WeChat and Alipay to pay can not only choose the currency of commercial bank deposits, but also digital renminbi.”
  From the perspective of security, there is no doubt that there is a state-endorsed payment method. More secure than third parties, especially in the era of big data. Digital RMB has controllable anonymity. For example, many people worry that if a mobile phone is stolen, wouldn’t the digital currency in it be gone? But the thief stole the money, always trying to transfer it away. In the cash era, money is anonymous, and you cannot prove that the stolen money belongs to you. In the era of digital currency, every money is documented, and the thief will leave a record as long as the transfer is made. Therefore, for users, digital currency is more secure and reliable.
  The same is true for currency issuers. Banknotes and coins are easily forged in the circulation process, and it is more difficult for inexperienced people to distinguish. After the popularization of digital currency, counterfeit currency will be invisible. Illegal behaviors such as money laundering, bribery, and terrorist financing can also be conducted by analyzing the source, destination, payment reason, payment amount and frequency of the currency, and even the digital currency itself. Regulation is easier.
  Digital currency is also conducive to promoting the internationalization of the RMB. The cumbersome currency exchange can be easily completed online, and the convenience brought by digitalization will make the RMB more recognized internationally. If digital renminbi transactions are applied to regional economic cooperation organizations such as the “Belt and Road”, it will help expand the scale of transactions, further drive digital renminbi transactions, and promote regional economic cooperation.
  In addition to China, the other three major economies in the world have also made frequent moves recently, actively promoting the process of digital currency. On October 2, 2020, the European Central Bank released its first digital euro report. Japan followed closely with the release of the digital yen report on October 9. The Fed has been in the field of digital currency for a long time.
  The digital renminbi, digital dollar, digital euro, etc. are all ready to go, and this big change in the financial industry has begun.