Mu Changchun, director of the digital currency Research Institute of the Central Bank： The central bank must speed up its pace and provide digital currency services
Reporter | Si Linwei
According to the 21st Financial Report, at the Innovation Summit of the Bank for International Settlements (BIS) held on March 25th, Mu Changchun, director of the digital currency Research Institute of the People’s Bank of China, said that in order to provide another backup or backup for the retail payment system, the central bank must speed up the pace and provide digital currency services.
In this meeting, many central bankers around the world, including Federal Reserve Chairman Powell, German central bank governor Weidemann, European Central Bank president Lagarde, current Bank of England governor Bailey and former Bank of England governor Carney, attended the meeting and delivered speeches. Studying the Central Bank digital currency (CBDC) is the core topic of this meeting.
As one of the top spokesmen of the US dollar system, the current Federal Reserve Chairman Powell is not enthusiastic about the attitude of the central bank digital currency. At the meeting of the Bank for International Settlements (BIS), he said: "We don’t have to rush the central bank digital currency, and the Federal Reserve doesn’t need to be the first central bank to launch the digital currency."
In contrast, China’s digital RMB has made rapid progress. On March 25th, as the second batch of pilot cities of digital RMB in China, some banks in Changsha have started to launch related businesses of digital RMB. At present, Changsha has realized a variety of scenarios to support digital RMB transactions, including public payment such as gas, and some consumption scenarios such as supermarkets, restaurants, long-distance passenger transport, gas stations, and postal express delivery and tourism.
Among the major central banks in the world, the layout of digital currency, the Bank of China, is very forward-looking and has made the fastest progress. Since 2014, the People’s Bank of China has set up a special team to conduct special research on digital currency’s distribution framework, key technologies, distribution and circulation environment and related international experience. By the end of August 2020, there were more than 6,700 ten-point scenes in China, with a total transaction volume of over 1.1 billion yuan and more than 3.12 million transactions.
With the continuous opening up of a batch of pilot cities, we can feel that the digital RMB is at the ready-to-go node, but the official launch time of the digital RMB is not clear at present. In May, 2020, Yi Gang, governor of the People’s Bank of China, said that the current pilot test of digital RMB is just routine work in the research and development process, which does not mean that digital RMB is officially launched, and there is no timetable for its official launch.
Digital RMB will coexist with electronic payment, but it will be more anonymous.
Regarding the technical features of digital RMB, Mu Changchun, director of digital currency Research Institute of the Bank of China, said at the China Development Forum on March 20th that in the foreseeable future, paper money, electronic payment and digital RMB will coexist. At the same time, the digital RMB is loosely coupled with the bank account, which can technically realize small anonymity. The protection of users’ privacy by digital RMB is the highest among the existing payment tools.
Mu Changchun said that the current payment tools, whether bank cards, WeChat or Alipay, are all tied to the bank account system, and the bank account is opened in real-name registration system, which cannot satisfy the anonymous appeal. Digital RMB is loosely coupled with bank account, which can technically realize small anonymity.
"The first meaning of controllable anonymity is anonymity, which should meet the needs of reasonable anonymous payment and privacy protection. The digital RMB wallet is designed by classification, and different levels of digital wallets are opened according to the degree of KYC (fully understanding your customers) to meet the different payment needs of the public. Among them, the wallet with the weakest KYC strength is an anonymous wallet, which can be opened only by using the mobile phone number. The balance and daily transaction limit of this kind of wallet are also the lowest, which can only meet the daily small payment needs. If you want to make a large payment, you need to upgrade your wallet, and the wallet balance and payment limit will increase with the strength of KYC. The consideration of this design is to meet the public’s reasonable privacy protection needs on the one hand, and to prevent the risk of large suspicious transactions on the other hand. " Mu Changchun explained.
Digital RMB still needs legal protection.
In addition to the technical pilot, the progress of digital RMB at the legal level has also attracted attention.
At present, regarding the definition of digital RMB, Mu Changchun, director of the digital currency Research Institute of the Central Bank, once explained that digital RMB is legal tender in digital form issued by the People’s Bank of China, operated by designated operating institutions and exchanged for the public. Based on the generalized account system, it supports the loose coupling function of bank accounts, is equivalent to paper money coins, has value characteristics and compensation, and supports controllable anonymity. The concept of digital RMB has two key points. One is that digital RMB is legal tender in digital form; Another point is that it is equivalent to paper money and coins. The digital RMB is mainly located in M0, that is, cash and coins in circulation.
On October 24th, 2020, the People’s Bank of China Law and the Draft for Comment, which were solicited by the People’s Bank of China, intended to expand the scope of RMB to include the digital RMB in the legal tender (Article 19).
In this regard, the special commentator of Phoenix Satellite TV and lawyer Jin Yan of Guangdong Oriental Jinyuan Law Firm told Interface News that there is only a short distance from the legal digital currency to achieve wide application, but there is still a long way to go in terms of laws and regulations. Before the large-scale spread of digital currency, it is inevitable to amend the law. But before that, digital currency needs to go through a lot of checks on legality. In order to circulate on a large scale, we need to solve the problem of its legal basis. "According to my judgment, in the revision of laws and legislation related to digital currency, the relevant departments will also follow the principle of’ equal treatment with real money’." Lawyer Jin Yan said.
First of all, we should solve the problem of correcting the name. For example, the first paragraph of Article 4 of the People’s Bank Law of China authorizes the People’s Bank of China to issue RMB on behalf of the country, manage the circulation of RMB, and exercise the right of currency issuance. Article 2 of the RMB Management Regulations states that the currency issued by the central bank according to law includes paper money and coins, and there is no legal tender in digital form. This means that according to the current law, there are only two physical forms of RMB: paper money and coins, excluding the intangible digital currency. Furthermore, there is no legal support for digital currency’s legal compensation. Therefore, it is urgent for digital currency to be granted legal status, otherwise it will be difficult to implement.
In addition, the issue of inheritance in the Civil Code implemented this year also involves legal digital currency. The inheritance part of the Civil Code has adjusted the scope of inheritable heritage, changing the "citizens’ income, houses, trees, cultural relics and copyrights" stipulated in the previous inheritance law into a "package" formulation-heritage is the personal legal property left by a natural person when he dies. Lawyer Jin Yan said that this general form of legislation made digital currency also classified as inheritable property.
The internationalization of digital RMB has been laid out in advance.
On January 16th, 2021, according to public reports, SWIFT, together with China People’s Bank Clearing Center, Cross-border Inter-bank Payment and Clearing Co., Ltd., digital currency Institute of the Central Bank and China Payment and Clearing Association, established Financial Gateway Information Service Co., Ltd., with Mu Changchun, director of digital currency Institute of the Central Bank, as one of the directors.
The shareholders of Financial Gateway Information Service Co., Ltd. are SWIFT, Clearing Center of China People’s Bank, Cross-border Inter-bank Payment and Clearing Co., Ltd., China Payment and Clearing Association and digital currency Research Institute of China People’s Bank in descending order.
SWIFT is a non-profit cooperative organization among international banks, headquartered in Brussels, Belgium, which mainly provides financial message network services for international financial business. Banks and other financial institutions complete financial transactions by exchanging messages with their peers through SWIFT network. It is the most important institution for international cross-border payment and settlement business at present.
On March 16th, according to the Cailian News Agency, Raymond Yue, President of the Hong Kong Monetary Authority, said that the HKMA and the digital currency Institute of the People’s Bank of China are studying the technical test of using digital RMB for cross-border payment and making corresponding technical preparations.
Reporting/feedback