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Central bank digital currency is one of the hot words in 2020. The Central Bank of China has started research on legal digital currency a long time ago and is scheduled to conduct internal closed pilot tests in some cities this year. Currently, the digital economy is an increasingly important driving force for global economic growth. The research and development and application of legal digital currency will help effectively meet the public's demand for legal currency under the conditions of the digital economy, improve the convenience, security and anti-counterfeiting level of retail payments, and promote the accelerated development of my country's digital economy. Therefore, the issuance of digital currency by the central bank has become a general trend. Below, the editor of the currency circle will introduce the knowledge about the issuance of central bank digital currency in detail.

 Central Bank Digital Currency Issuance Time

On the evening of April 14, a photo of the central bank’s digital currency being tested within an Agricultural Bank of China account was circulated on the Internet. It was reported that the central bank’s digital currency was being tested in four pilot cities: Shenzhen, Xiongan, Chengdu, and Suzhou.

I believe many people are still confused about central bank digital currency. Central bank digital currency refers to the digital currency issued by the central bank, which is a liability of the central bank, has national credit, and is equivalent to legal currency. China's central bank digital currency is also different from other central bank digital currencies. Its English abbreviation is "DC/EP".

In December 2019, the central bank’s digital currency (DC/EP) pilot program was divided into two phases:

Small-scale scene closure pilot at the end of 2019

Large-scale promotion in Shenzhen in 2020

The pilot institutions include the four major state-owned commercial banks, Industrial Bank of China, Agricultural Bank of China, China Construction Bank and China Construction Bank, as well as the three major operators of China Mobile, China Telecom and China Unicom.

Pilot scenarios include transportation, education, medical care, consumption, etc.

In fact, the central bank’s stance on the development of digital currencies has always been “steady advancement.”

On April 16, the research team of the General Office of the People's Bank of China published an article titled "Building a Modern Central Bank System" in "China Finance" stating that it will promote the research and development of my country's DC/EP legal digital currency.

On April 3, the central bank’s 2020 National Currency, Gold, Silver and Security Work Video and Telephone Conference called for “the steady development of legal digital currency research and development work.” The meeting pointed out that the first task in 2020 is to strengthen top-level design, unswervingly promote the research and development of legal digital currencies, systematically promote the reform of the cash issuance and withdrawal system, and accelerate the advancement of banknote processing business, issuance library guarding and issuance fund pledge operations.

In August last year, Mu Changchun, then deputy director of the Central Bank’s Payment and Settlement Department, said: “From 2014 to now, the research on the central bank’s digital currency (DC/EP) has been carried out for five years, and it is now “ready to come out.”” Then in 2019 On September 6, he officially became the director of the Central Bank’s Digital Currency Research Institute.

 What are the functions of digital currency?

Judging from the screenshot of the Agricultural Bank of China’s digital currency wallet, digital currency has four common functions: “scan code payment”, “remittance”, “receipt and payment”, and “bump”, which are basically similar to the daily payment and management functions of bank electronic accounts.

The "touch and touch" function means that digital currency can be paid "offline" without the need for network and mobile phone signals. The payment can be completed by just touching the mobile phone. It can be said to be quite convenient.

Other special features: Digital currency has the function of a distributed ledger, which can easily meet the needs of anonymous payments. Hiding “private money” will never be discovered again in the future~ In addition, digital currency can also achieve anti-money laundering, anti-tax evasion, anti-telecom fraud, and anti-terrorist financing.

 What impact does digital currency have on us?

1. Benefits to the collection section

The issuance of digital currency means that banknotes will gradually be replaced, which is good for the collection sector, especially the delisted varieties! As the stock of banknotes in the market gradually decreases, the value of collections gradually increases.

2. Reduce issuance costs

The issuance of physical currency requires design, printing, withdrawal, storage and other processes, as well as the production of related derivative equipment. The cost of issuing a set of physical currency is very high. In comparison, the cost of digital currency is much lower and it is easy to carry, saving both time and manpower and material resources.

3. Prevent U.S. financial containment

The central bank's digital currency also has a major role, that is, to seize opportunities, prevent financial containment that may be initiated by the United States, and ensure China's financial security. Dollar hegemony refers to the two major tools used by the United States to curb the finances of other countries through the dollar and the global currency settlement system.

The above is the currency circle editor's introduction to the knowledge of the central bank's issuance of digital currency. In fact, the central bank's digital currency can be simply understood as the money issued by the central bank. Some of it is converted into digital form, and commercial banks still need to exchange it at an equivalent price. In the future development process, digital currency has a richer imagination than traditional banknotes. This can also prevent excessive funds from flowing into WeChat and Alipay, which plays a very important role in the healthy development of banks.