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Central bank digital currency, its English abbreviation is CBDC, its full English name is Central bank digital
currencies. Central bank digital currencies are electronic forms of central bank money that can be used by households and businesses to make payments and store value. The Chinese version of CBDC is called digital renminbi. It is a controllable and anonymous payment instrument issued by the People's Bank of China, operated by designated operating agencies and redeemed by the public. This currency supports the loose coupling function of bank accounts and is equivalent to banknotes and coins. So many investors are curious, is this central bank digital currency a cryptocurrency? Let the editor of the currency circle talk about it below.

 Is central bank digital currency a cryptocurrency?

Not all central bank digital currencies use blockchain technology. Its design principle is to completely digitize the central bank's paper currency, that is, to replace the physical paper. You can see it, but you can't touch it. That's what it means. People only need to use a digital wallet to pay. In essence, the central bank is still the central management system and can be directly connected with other systems, that is, the current formation of the People's Bank of China
- This two-tier operating model of commercial banks, commercial banks and finally the public.

Central bank digital currencies have certain characteristics of blockchain digital currencies, namely anonymous payments. The central bank's digital currency adopts "dual offline payment", that is, we can still make payments when both parties to the payment and payment are offline. Before problems arise when the central bank controls the currency market digitally, only banknotes can complete dual offline payments, and even developed e-commerce payments cannot truly do so.

Imagine that in the future, as long as two people have installed the central bank's digital wallet, no network or signal is needed. As long as the mobile phone has power, the two mobile phones can realize real-time transfer by touching each other. Double offline payment means that central bank digital currencies can complete transactions under extreme circumstances, such as communication interruptions caused by natural disasters such as earthquakes, or shopping in underground supermarkets without signal networks to complete electronic payments.

 Development Prospects of Central Bank Digital Currency

A sound and clear legal framework is a necessary prerequisite for any central bank to issue CBDC, but the legal authority to issue CBDC is still unclear in many countries. Currently, about a quarter of central banks have or will soon have the legal authority to issue CBDC, about 26% do not have the authority to issue CBDC, and about 48% are still unsure. The COVID-19 epidemic has accelerated the digitization process of payments and added new motivations for CBDC. It can not only serve as a new system but also provide financial assistance. In the future, more countries will formulate legal systems for CBDC.

However, CBDC currently faces traditional financial markets and traditional retail payments. In the future, it should be positioned to solve the difficulties and pain points in the traditional financial field, focusing on scenarios where financial services were lacking in the past. For example, on the enterprise side, banks can use CBDC to trace the final use of corporate credit funds to solve the problems of difficult and expensive financing for small and medium-sized enterprises; on the personal consumption side, banks can track the use of funds based on CBDC to ensure that the use of funds and loan commitments are consistent. consistency.

In the foreseeable future, under the combined influence of multiple factors, including the continued research and development of CBDC, the acceleration of payment digitization during the COVID-19 epidemic, and the demonization of global stablecoins, more and more countries will consider the necessity of issuing CBDC. , more actively explore the application scenarios and implementation effects of CBDC.

The above is a detailed introduction by the editor of the currency circle on the question of whether central bank digital currency is a cryptocurrency. The main revelation of the development of the central bank's digital currency to our country's policies is that our country should speed up DCEP pilots and related research work, actively consider how to respond to changes in the financial structure, and should also explore various applications of regulatory technology in DCEP scenarios, and explore and improve digital What is the currency ecosystem like, and promoting cooperation with other countries and digital currency research institutions that are developing legal digital currencies can also be regarded as an advance layout for cross-border settlement business.