What is the significance of the central bank's digital currency? Introduction to the central bank's digital currency and its issuance time

Digital currency can be understood as the digitization of RMB. It has two significant advantages: "payment without an account" and "payment without a network". After Facebook launched Libra this year, the central bank's digital currency also stepped up its pace. What we see is both a challenge and an opportunity. Generally speaking, digital currency will be more convenient for ordinary people to use RMB for settlement, and it will bring unprecedented security, and there will be no need to worry about the existence of counterfeit currency in the future.

What is the significance of central bank digital currency

First, it is intended to address the challenges of cryptocurrencies. Solutions to the challenges posed by cryptocurrencies such as Bitcoin have long been sought, and the launch of Libra has made it more urgent for central banks to issue digital currencies;

Second, it effectively improves the efficiency and competitiveness of the monetary system. If the digitization of banknotes is truly implemented, saving on the issuance and circulation of banknotes is undoubtedly a manifestation of improved efficiency. At the same time, it will help the development of cross-border payment business, greatly save the operating costs of traditional finance, and improve the importance of financial operation efficiency.

Introduction and issuance time of central bank digital currency

Or launched on Double Eleven.

my country's currency is divided into M0, M1 and M2 (M0 is the cash in your hand, M1 and M2 are the money you deposit in the bank). When you complete a transfer or payment through Alipay or WeChat, it is actually Alipay or WeChat that helps you transfer the money in your bank account to the other party's account. In other words, Alipay and WeChat act on M1 and M2, the money in the bank.

In theory, this money has been digitized. If the central bank's digital currency is used to replace M1 and M2 again, it will not only not help improve payment efficiency, but will also cause a huge waste of existing systems and resources. Let's look at the M0 we missed. M0 is the cash we have (banknotes and coins). This money is not only easy to counterfeit, but also has vicious risks such as money laundering and terrorist financing. When we personally want to be anonymous, we cannot be anonymous, and when the country tracks down the criminals' financial transactions, it is still difficult to track.

Therefore, the current electronic payment cannot completely replace M0. It is necessary for the central bank to issue digital currency to gradually replace the physical M0 and truly realize the electronicization of currency.

The difference between digital currency and Alipay and WeChat

1. Digital currency has the best effectiveness and security

Digital currency is issued by the central bank and ultimately settled at the central bank; WeChat's e-wallet and Alipay are not settled through central bank currency, but through commercial bank deposit currency.

2. Digital currency has a higher status

In theory, commercial banks will go bankrupt, and there have been such cases in history, which is why the People's Bank of China has established a deposit insurance system. If WeChat goes bankrupt one day, and the money in the WeChat wallet is not insured, then during the bankruptcy liquidation, the previous 100 yuan may only return you 0.1 cent. Digital currency is issued and settled by the central bank, so this problem does not exist.

In short, the central bank has released digital currency, and people will have more choices when choosing mobile payment. The launch of digital currency will not have much impact on the status of WeChat Pay and Alipay. It is just that the payment tool has changed, the functions have increased, and the channels and scenarios have not changed.