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2020
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Digital RMB Pilot Speeds Up
As the pace of the central bank's legal digital RMB (DCEP) pilot accelerates, more and more local governments are actively striving for the digital RMB pilot.
As the pace of the central bank's legal digital RMB (DCEP) pilot accelerates, more and more local governments are actively striving for the digital RMB pilot.
On December 10, the "Proposals of the Shanghai Municipal Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for Shanghai's National Economic and Social Development and the 2035 Long-term Goals" were officially released, which proposed to "actively strive for pilot projects for the use of digital RMB".
In the view of industry insiders, Shanghai's pilot for the use of digital RMB may not only focus on small retail scenarios, but also get involved in the field of trade settlement and payment.
Prior to this, the Digital Currency Research Institute of the People's Bank of China and the People's Government of Changning District of Shanghai signed a strategic cooperation agreement. The two sides will set up Shanghai Financial Technology Company to gradually realize the landing of the trade finance blockchain platform and technology research and development center.
A day later, Suzhou held a pilot digital RMB issuance launch ceremony. The digital RMB red envelopes issued this time can be consumed by designated offline merchants in Suzhou through "Digital RMB APP" or online through Jingdong Mall.
A head of the IT department of a bank familiar with the progress of digital RMB research and development said that with the increasing expansion of the application scenario of the central bank's legal digital RMB, relevant banks need to solve three major challenges at present. First, continuously improve the stability of the digital RMB payment and settlement system and the efficiency of transaction processing and clearing to meet the increasingly frequent and high volume of digital RMB transactions. The second is to effectively avoid the emergence of moral hazards such as the double spending problem, that in the double offline payment environment, some people take advantage of the digital RMB has not yet been transferred out, take this digital RMB secondary consumption; Third, based on the lack of interest income in digital RMB, how can relevant banks cooperate with merchants to launch more affordable digital RMB payment activities, so as to attract more people to use digital RMB and enhance the popularity of the latter.
It is worth noting that the application of the central bank's legal digital RMB is no longer limited to the territory.
In early December, Yu Weiwen, President of the Hong Kong Monetary Authority, said that the Hong Kong Monetary Authority is currently studying the use of digital renminbi for cross-border payment technical tests with the Digital Currency Research Institute of the People's Bank of China, and making corresponding technical preparations.
In his view, the current cross-border payment has the problems of long time, high cost and low transparency. The reason is that different regions have different operating time zones, different ways of implementing international standards, and different technical standards for payment systems. However, this also gives the digital RMB more room for development to solve the pain points of these industries.
"Of course, if the digital yuan is to be popularized in the field of cross-border payments, there are two major prerequisites." Li Lianxuan, chief researcher of the European Cloud Chain Research Institute, pointed out. The first is that China has signed currency swap agreements with other countries, thus opening up the exchange and two-way circulation channels of overseas digital RMB, and the second is to build a multi-layer operation system and settlement model of China's central bank-commercial banks-overseas central banks to ensure the efficient and sound operation of the settlement and exchange of digital RMB transactions overseas.
The first test of double offline payment to crack the "double flower" problem
On the evening of the 11th, Suzhou held a launching ceremony for the issuance of pilot digital RMB.
Specifically, people who win the lottery and receive red envelopes of digital RMB can either go to designated offline merchants in Suzhou through "Digital RMB APP" or make online purchases through Jingdong Mall.
When the winning person uses digital RMB to pay, red envelopes will be given priority. If the amount is insufficient, the wallet can be recharged before payment, or other payment methods can be used to combine payment.
In the view of industry insiders, compared with the previous public test of digital RMB red envelope distribution completed in Shenzhen, this time they are more concerned about the digital RMB red envelope double offline payment and Internet scene online payment test carried out in Suzhou.
It is reported that this pilot will select less than 1000 people from the customers participating in the red envelope lottery for digital RMB consumption to participate in the offline wallet experience. Once the digital RMB realizes the dual offline payment function, it will undoubtedly make the collection, payment and transfer functions of the digital RMB in the absence of the Internet accessible, making the digital RMB infinitely close to "cash in circulation".
The aforementioned head of the bank's IT department revealed that another important purpose of this double offline payment test is to solve the double spending problem of digital RMB in this scenario. Previously, in the internal testing phase, they found that due to the low efficiency of the digital RMB system in transaction settlement, the digital RMB in users' wallets has not been "transferred" for a long time, allowing them to use the digital RMB for second shopping, creating moral hazard.
"We intend to introduce a recovery mechanism, that is, if the user has a double spending situation, the bank will recover the relevant consumption money from him. However, the bank's legal department thinks that this is quite cumbersome and requires the bank to communicate with the user repeatedly and collect sufficient evidence, which will consume a lot of manpower and material resources." He pointed out. Therefore, they have done a lot of internal system tests to ensure that the settlement processing efficiency of digital RMB in the dual offline payment scenario is greatly improved, and the probability of double spending problem is reduced as much as possible.
In the view of a number of bankers participating in the digital RMB pilot, if the settlement processing efficiency of digital RMB in the field of dual offline payment is further improved, its application scenario is expected to extend to small trade and trade finance scenarios, because many small and micro enterprises have higher timeliness requirements for upstream and downstream trade funds.
A person in charge of the East China branch of a joint-stock bank pointed out to reporters that in order to properly solve the settlement and reconciliation problem of digital RMB in the trade scenario, they have introduced a large number of block chain technologies to ensure that the capital settlement of enterprises in the upstream and downstream trade chains "has accounts to rely on".
However, he found that if digital RMB is to be popularized in the fields of trade settlement and supply chain finance, it still needs to break through two major bottlenecks. First, the existing block chain technology still cannot meet the demand for high concurrency of fund payment and settlement business in the trade field. Second, digital RMB cannot bring interest income, resulting in some core supply chain enterprises being reluctant to use digital RMB to pay for trade loans, this is because it will cost the business a substantial return on interest on capital.
"At present, we are also trying to solve these bottlenecks." He pointed out. For example, banks are learning from certain technical concepts in the blockchain field, including asymmetric encryption, proof of workload, time stamps, etc., combined with their own research and development of UTXO model, smart contracts and other patents to meet the high concurrent needs of the digital RMB settlement business in the trade chain.
The journey of cross-border payment scenario application
It is worth noting that with the accelerated pace of digital RMB research and development pilot, its internationalization process is quietly moving.
"Last year, we conducted research with the Central Bank of Thailand to use the central bank's digital currency and blockchain platform to solve various problems in cross-border payments." Mr. Yu said that the current joint research has entered the second phase, including exploring specific business applications, as well as the operationality and extensibility of the platform (I. e., expansion to three or more central bank digital currencies).
In Li Lianxuan's view, the prospect of cross-border payment of digital RMB is actually quite broad-on the one hand, many countries need to introduce digital currency to effectively solve the problems of limited circulation of domestic banknotes, reducing large fluctuations in exchange rates, and improving the ability to track currency investment. On the other hand, they hope to increase cross-border trade volume and create more income for local farmers and small and micro enterprises by popularizing cross-border payment of digital currency.
"However, the current digital RMB internationalization is also facing no small challenge." He pointed out. First, China needs to sign currency swap agreements with these countries first, thus creating operational space for digital RMB exchange and two-way circulation, and second, all parties need to build a multi-layer operation system and settlement model of China's central bank-global commercial banks-overseas central banks to ensure the efficiency of overseas circulation and exchange of digital RMB is stable and efficient.
A person familiar with the research on digital RMB cross-border payment pointed out to reporters that the cross-border payment of digital RMB may give priority to the small retail scene of mainland tourists during their travel in Hong Kong. After all, the use of RMB in Hong Kong has become quite popular. Its exchange and two-way circulation channels are quite smooth and merchants are more willing to accept it, bringing more diversified payment options to the people of both places.
"If the digital RMB is effectively popularized in the Hong Kong-Mainland trade scenario and even becomes a new choice for trade financing and settlement payments, the relevant departments can take the opportunity to promote the relevant mature operating system to other countries and gradually promote the internationalization of the digital RMB and its cross-border use in a wider range." He pointed out.