At present, the research and development of ＂digital RMB＂ is in the state of ＂horse racing＂

　　The rapid popularization of mobile payment makes people have rich reverie about "cashless society". China is the most widely used country of mobile payment in the world, and it is also one of the countries closest to a cashless society. However, only relying on mobile payment can not meet the requirements of the digital finance era, and the concept of "digital currency" with a deeper focus came into being.

　　Recently, the relevant person in charge of the People’s Bank of China (hereinafter referred to as the central bank) said in public that the digital currency system is being developed and the "digital RMB era" is coming. Why did the central bank launch the digital currency? What are the connections and differences between digital currency, the central bank, online payment and so-called "virtual currency"?

　　What’s different about digital currency?

　　At the 3rd China Financial Forty-Person Yichun Forum held recently, Mu Changchun, Deputy Director of the Payment and Settlement Department of the Central Bank, said that the digital currency Research Institute under the Central Bank had started the development of the digital currency system as early as 2018, and digital currency, the central bank, was "ready to go", which subsequently triggered a wide discussion in the Internet and financial circles.

　　It is not a temporary move for the central bank to study and issue digital currency. It is reported that from 2014 to now, the research of digital currency, the central bank, has been going on for five years. In 2017, the digital currency Research Institute of the Central Bank was formally established. At present, the Institute has applied for 74 patents involving digital currency technology.

　　In recent years, with the development of Internet technology, especially blockchain technology, many so-called "virtual currencies" have emerged around the world, such as Bitcoin and Wright currency, which have been controversial in recent years. So, what is the difference between the digital currency proposed by the central bank and these commercial "virtual currencies"?

　　From the perspective of monetary attributes, "virtual currency" such as Bitcoin is not money in essence. Unlike the legal tender issued by the state, "virtual currency" is not supported by national credit. Its speculation is affected by factors such as tight supervision and technical problems, and its price often fluctuates greatly, which greatly interferes with the normal order of the domestic and even global monetary and financial systems.

　　From the principle of currency circulation, in order to ensure the orderly operation and macro-control of the financial system, only the state can exercise the highest power of issuing currency. Therefore, digital currency, the central bank, is a legal digital currency issued by the central bank based on national credit, which is essentially different from "virtual currency" such as Bitcoin.

　　Can it really replace circulating cash?

　　China’s electronic payment is very developed, so why should the central bank introduce the statutory digital currency? "For ordinary people, the boundary between the basic payment function and the central bank’s digital currency is relatively vague, but the central bank’s digital currency in the future is very different from electronic payment in some functions." Mu Changchun said that in the past, the transfer of funds of electronic payment tools had to be completed through traditional bank accounts, while digital currency, the central bank, could realize the value transfer without traditional bank accounts, which greatly reduced the dependence on accounts in the transaction. Generally speaking, digital currency, the central bank, can be as easy to circulate as cash, which is beneficial to the circulation and internationalization of RMB, and can also achieve controllable anonymity.

　　It is understood that the existing cash in circulation is easy to be anonymously forged, and electronic payment tools such as bank cards and Internet payment cannot fully meet the public’s demand for anonymous payment. Therefore, the design of digital currency, the central bank, mainly aims at the substitution of cash in circulation, which not only keeps the attributes and main features of cash, but also meets people’s needs for portability and anonymity.

　　Wang xin, director of the Research Bureau of the Central Bank and the Bureau of Currency, Gold and Silver, said that the central bank’s digital currency mainly replaces cash to a certain extent in China, which will help to optimize the central bank’s monetary payment function and improve the central bank’s monetary status and the effectiveness of monetary policy.

　　From this point of view, the introduction of digital currency by the central bank is neither a popular e-wallet or online payment, nor a complete "reinvention" to replace the existing RMB system, but a brand-new encrypted electronic money system with certain substitution for circulating cash.

　　Shao Fujun, chairman of China UnionPay Co., Ltd., said that the statutory digital currency by the central bank will have a great positive impact, which can improve the efficiency of monitoring the currency operation and enrich the means of monetary policy.

　　It is reported that digital currency, the central bank, is mainly used for high-frequency business scenarios of small retail. Zhou Xiaochuan, the former governor of the central bank, once pointed out that the essence of studying digital currency is to pursue the convenience, rapidity and low cost of the retail payment system.

　　R&D is in the state of "horse racing"

　　In recent years, commercial virtual currency has been controversial, and people increasingly realize that the future development trend of digital currency is still the legal digital currency issued by central banks based on national credit.

　　It is understood that no central bank in the world has officially launched the statutory digital currency. Many central banks, including the Bank of England, the Bank of Canada and the Bank of Sweden, are developing the legal digital currency. The International Monetary Fund says it plans to launch a global digital currency under the SDR mechanism — — International Monetary Fund currency (IMFCoin).

　　At present, China is still in the stage of accelerating research and development in digital currency. For example, the central bank held a working video conference in the second half of 2019 on August 2, demanding "accelerating the pace of R&D in China’s legal digital currency". Recently released "Opinions of the Central Committee of the Communist Party of China and the State Council on Supporting Shenzhen to Build a Pilot Demonstration Zone in Socialism with Chinese characteristics" clearly stated that "innovative applications such as digital currency research and mobile payment are supported in Shenzhen".

　　It is understood that in the future, the central bank will not directly issue digital currency to the public, but adopt a two-tier operating system, that is, the central bank will first exchange digital currency for banks or other operating institutions, and then these institutions will exchange it for the public. The central bank has stipulated that digital currency should be piloted in some scenes in the early stage, and then further promoted when it is more mature. Due to prudent consideration, the pilot exit mechanism will be well designed.

　　Mu Changchun revealed that at present, the development of digital currency, the central bank, is in a state of "horse racing", and several designated operating agencies adopt different technical routes for research and development. "It’s not necessarily a blockchain, any technology will do. Regardless of blockchain or centralized account system, electronic payment or so-called mobile money, the central bank can adapt to any technical route you take. "