The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

As we all know, digital currency is one of our future development directions. It is a virtual currency that can be applied to the real goods and service trading market, and it can also bring great convenience to our lives. Now digital currency has become the most important component of Internet finance and is slowly beginning to penetrate into various areas of the financial industry. With the development of our country's economy, our country has also begun to consider issuing a central bank digital currency. Today, our country has actually issued its own central bank digital currency, the digital renminbi. Many investors still don’t know what the significance of the issuance of central bank digital currency is? Let the editor of the currency circle tell you about it below.

 What is the significance of the issuance of central bank digital currency?

The issuance of central bank digital currency can protect the status of legal tender, reduce the cost of coinage, and use digital currency for transactions will be more convenient.

First: The emergence of Bitcoin and some other encrypted assets will have a certain impact on a country’s monetary sovereignty. The primary purpose of launching central bank digital currency is to protect monetary sovereignty and legal currency status. At the same time, the emergence of digital RMB will improve the efficiency of the payment system and enhance the convenience of RMB payments.

Second: Central bank digital currency can solve two problems that exist in the practical application of cash and electronic payments. First, banknotes and coins are easy to be anonymous and counterfeited, and there is a risk of being used for money laundering and terrorist financing; second, based on existing banks Electronic payment with tightly coupled accounts cannot meet the public’s demand for anonymous payments.

Third: The existing printing and issuance costs of banknotes and coins are high and inconvenient to carry, so there is a need for digitization. Once the central bank's digital currency is activated, it will greatly save the costs required for coinage.

Fourth: The issuance of central bank legal digital currency will make it possible to collect real-time data on currency creation, accounting, and flow. After data desensitization, in-depth analysis will be conducted through big data and other technical means to provide support for currency placement and monetary policy. The formulation and implementation provide useful reference and provide useful means for economic regulation. At the same time, central bank digital currency can also provide help in anti-money laundering and counter-terrorism financing.

 Characteristics of central bank digital currency

At present, countries have mainly formed three basic consensuses in the process of issuing and piloting central bank digital currencies. First, a clear centralized organization, guaranteed by national credit. Second, prices are relatively stable, which is related to the value standard function of currency. The reason why Bitcoin has been unable to serve as a legal currency for a long time is largely because its value is extremely unstable. Third, to maintain technology neutrality at the technical level, distributed accounting can be used, or traditional bank account systems such as binary account systems can be used.

The current distributed accounting method is still unable to fully meet the transaction requirements at the retail level in terms of high concurrency. From the perspective of applicable scenarios and object orientation, central bank digital currencies are mainly divided into wholesale and retail types. Wholesale CBDC is more like a new financial infrastructure for settlement by financial institutions; retail CBDC mainly solves the problem of cash digitization and can be understood as a digital central bank liability. Its typical structure includes two categories: centralized architecture and distributed database.

Judging from the progress of China's digital renminbi, since the central bank established the legal digital currency research group in 2014, there has been limited progress for a considerable period of time. The development of digital renminbi has accelerated since this year. The COVID-19 epidemic has promoted the development of contactless finance, highlighted the importance of cash substitution in payments, and digital renminbi has quickly entered the pilot stage. Digital RMB is a typical retail CBDC. Retail CBDC is divided into direct CBDC, hybrid CBDC, intermediate CBDC, indirect or synthetic CBDC. Digital RMB is mainly a hybrid CBDC. In terms of architectural choices, the digital renminbi is mainly a direct liability of the central bank, with intermediaries responsible for retail payments and the central bank retaining a central ledger of all transactions. In terms of technology selection, the digital yuan is technology neutral, with both traditional infrastructure and distributed ledger technology available.

The above content is the specific elaboration of the currency circle editor on the significance of the issuance of central bank digital currency. Through the above introduction, I believe everyone has a clearer understanding of the basic concept of central bank digital currency. In fact, after understanding this concept, we can imagine how central bank digital currency will change our lives. Firstly, in the credit reporting system, dishonest people will be punished more severely. Secondly, in the national governance system, transparent numbers will be more reliable than honest people. Finally, in finance, this can also become a way for the world currency to challenge the US dollar center. start. However, more theoretical guidance and empirical support are still needed to achieve rapid development.