Technical editor: Wang Zhizhi, from sifou newoffice
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It is reported that the central bank’s digital currency electronic payment (DCEP), developed by the people’s Bank of China, has started internal testing in the Agricultural Bank of China.
According to the screenshot of the internal test wallet, DCEP wallet will support functions such as digital asset exchange, digital wallet management, query of digital currency transaction records, and wallet attachment. It also supports basic functions such as code scanning payment, remittance collection and payment, mobile phone chip payment, etc.
Previously, Caijing magazine reported that the first batch of DCEP pilot institutions will include four state-owned commercial banks of industry, agriculture, China and construction, and three operators of China Mobile, China Telecom and China Unicom. Its pilot scenarios include transportation, education, medical treatment, consumption, etc., reaching C-end users. All kinds of signs show that the central bank is accelerating the implementation of digital currency in the near future.
As early as 2014, the central bank has organized experts to set up a special research team on legal digital currency, and DCEP will pilot in Shenzhen by the end of 2019.
In January 2020, the central bank said that it had basically completed the top-level design, standard formulation, function research and development, joint debugging and testing of legal digital currency. In April 2020, the people’s Bank of China proposed in the 2020 national teleconference on currency, gold and silver and security work that we should strengthen the top-level design, unswervingly promote the research and development of legal digital currency, systematically promote the reform of cash issuance and withdrawal system, and accelerate the transformation of bank note processing business, issuing treasury guard and issuing fund escort.
In the DCEP pilot plan reported by Caijing, DCEP regulators and pilot plan have made it clear:
1) Regulatory agency: DCEP is led by the monetary Bureau of the central bank and implemented by the digital currency Research Institute of the central bank. The digital currency and anti-counterfeiting Management Office of the monetary Bureau of the people’s Bank of China is the only official office related to DCEP.
2) Pilot institutions: including four state-owned commercial banks of industry, agriculture, China Construction and China Mobile, China Telecom and China Unicom.
3) Pilot scenarios: including transportation, education, medical care, consumption, etc., will reach C-end users, and pilot banks can choose pilot scenarios according to their own advantages.
4) Pilot location: DCEP is being piloted in Shenzhen and is expected to be launched in Suzhou. Recently, the Yangtze River Delta Financial Technology Co., Ltd. under the central bank is urgently recruiting talents related to blockchain. All four banks have set up DCEP closed development project teams in Beijing.
5) Pilot plan: it is divided into two stages, with small-scale closed pilot at the end of 2019 and large-scale promotion in Shenzhen in 2020.
6) Pilot progress: DCEP related standards and payment system access and other testing work are advancing at the same time.
There are also multiple reasons for the introduction of DCEP.
According to the public statements of central bank officials, we can find that the main reasons for the introduction of DCEP include:
- Conform to the wave of digital economy and boost the development of digital economy.
- There are several problems in the existing banknote system. For example, the cost of distribution, printing, retrieval and storage is high, and the circulation system is multi-level; it is inconvenient to carry; it is easy to be forged, anonymous and uncontrollable, and there is a risk of being used for money laundering and other criminal activities.
- It is conducive to restraining the public demand for private cryptocurrency and safeguarding the national digital currency sovereignty.
- To create space for negative interest rate will solve the problem of residents withdrawing cash to restrict the negative interest rate policy.
There are voices in the market that DCEP is just a digital legal currency. However, some media said that the market underestimated DCEP’s vision and possible landing effect.
The positioning of central bank’s digital currency is digital cash, and one of the purposes of its issuance is to solve the problem that physical cash is difficult to be monitored. According to the patent submitted by the central bank, in order to achieve this purpose, DCEP may load the function of smart contract, so that DCEP can only take effect when it meets specific conditions (such as specific economic status, time point, interest rate and flow to the main body).