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CCTV news: the central bank's digital currency will not cause inflation

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What is the Chinese version of digital currency? How does it work? The central bank response

What is China's digital currency? How to use it? Central bank responds!
CCTV news client

Recently, the development of legal digital currency in China has aroused widespread concern. A person in charge of the digital currency research institute of the people's bank of China (pboc) said recently that the research and development of digital RMB is proceeding steadily, and pilot tests are being carried out in shenzhen, suzhou, xiongan new area, chengdu and the future scenarios of the winter Olympics to optimize and improve the functions.

The people's bank of China has been studying legal digital currency since 2014. Institute of the people's bank of digital currency relevant controller introduces, at present the digital research and development work is in the steady, digital currency system on double operation, currency in circulation (M0) to replace, under the premise of controllable anonymous, basically complete the top design, standards, functional development, alignment testing of the work, and follow the steady, safe and controllable, innovation, practical principles.

The person in charge of digital currency research institute of the people's bank of China stressed that the current DC/EP information is the test content in the process of technology research and development, which does not mean that the digital RMB is officially issued. The current closed test of digital RMB will not affect the commercial operation of listed institutions, nor will it affect the RMB issuance and circulation system, financial market and social economy outside the test environment.

What is the Chinese version of digital currency?

How does it work?

Simply put, the people's bank of China digital currency is the electronic version of RMB.

When it comes to digital currencies, the first reaction is likely to be bitcoin or Libra, which facebook plans to launch.

However, unlike these so-called digital currencies, the digital currency to be launched by China's central bank is backed by national credit and can be described as an electronic version of the renminbi. Therefore, the digital currency of the central bank is of legal compensation.

More importantly, the central bank's digital currency will be more stable with national backing. Bitcoin and other so-called virtual currencies, unable to guarantee the stability of the value of the currency, "chives" became common.

From the perspective of usage scenarios, the central bank digital currency does not pay interest, and can be used in small, retail and high-frequency business scenarios, compared with paper money is no different. At the same time, all existing regulations on cash management and anti-money laundering and anti-terrorist financing should be complied with when using.

What are the advantages of digital RMB?

Cheaper to issue, easier to trade...

Some senior industry insiders say that the payment, transaction and anti-money laundering based on RMB cash are more and more difficult to manage and more and more expensive in modern society. And issue digital currency, can solve above problem effectively.

At the same time, the Chinese version of digital currency does not need to be tied to any bank account, which is beyond the control of the traditional bank account system.

In addition, payment functions of online banking and payment platforms are often paralyzed in the case of poor network signal, while DC/EP's dual offline technology guarantees the use of central bank digital currency as well as paper currency in extreme cases. For example, in the absence of a network, transfers or payments can be made by touching two phones with a DC/EP digital wallet.

Can the issue of digital currency trigger inflation?

An equivalent replacement for the currency in circulation would not devalue the money

The digital currency issued by the central bank starts with the digital currency replacing the notes and COINS in circulation. Assuming that the currency in circulation is 100 yuan, the digital currency of the central bank will replace the 100 yuan equivalent.

In order to ensure that the central bank does not overissue digital currency, commercial institutions pay the central bank full or 100% of their reserves. That is to say, when issuing digital currency, the people's bank of China first converts it to a bank or other operating institution, which then converts it to the public.

In addition, considering that the early stage of digital currency is limited to the pilot, there will not be a large number of issuance and comprehensive promotion in the short term, and the velocity of currency circulation will remain at a normal level.

As a result, digital money does not cause inflation.

(CCTV reporter sun yan)

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