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Cyber Bitcoin
Edited by qqqpeter at 2020-4-19 16:45

Sina.cn reported that the civilian digital currency, such as Alipay and Wechat pay, has been thriving in China for years, but is not recognized by the state. The People's Bank of China has been developing national digital currencies since 2014 and is currently conducting internal closed beta testing in several locations, with future launches just around the corner. Many people do not understand the central bank's digital currency, and even worry that the Chinese Yuen (CNY) in their hands will be inflationary, today's CCTV News quoted the relevant head of the People's Bank of China's Digital Currency Institute to explain the Chinese version of digital currency.

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The central bank said it has been working on fiat digital currencies since 2014, and is now steadily advancing its digital yuan research and development work, first conducting internal closed pilot tests in Shenzhen, Suzhou, Xiongan New District, Chengdu and future Winter Olympics scenarios to continuously optimize and improve functionality.

The central bank said that the current online DC/EP (Digital Currency Electronic Payment) information is the test content of the technology development process, does not mean that the digital Chinese Yuen officially landed on the issue.

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The current closed beta testing of the digital Chinese Yuan will not affect the commercial operation of listed institutions, nor will it have an impact on the Chinese Yuan issuance circulation system, financial markets and socio-economics outside the testing environment.

China's digital Chinese Yuan system has basically completed the top-level design, standard development, function development, and coding test under the premise of two-tier operation, M0 replacement, and controllable anonymity, and follows the principles of stability, security, controllability, innovation, and practicality.

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 the Chinese Yuan.

When it comes to digital currencies, everyone's first thought is probably Bitcoin or Facebook's planned launch of Libra.

However, unlike these so-called digital currencies, the digital currency to be launched by our central bank has a national credit backing and can be described as an electronic version of the yuan. Therefore, the central bank's digital currency is legal tender.

More importantly, with a national backing, the value of central bank's digital currency will be more stable. The so-called virtual currencies such as bitcoin cannot guarantee the stability of the currency, and being "cut leeks" has become a common occurrence.

In terms of usage scenarios, the central bank digital currency does not pay interest and can be used in small, retail, high-frequency business scenarios without any difference compared to paper money. At the same time, it should be used in accordance with all the provisions in force concerning the management of cash and anti-money-laundering, counter-terrorist financing, etc.

What are the benefits of digital Chinese Yuan?

Low issuance costs, more convenient transactions.......

A senior industry insider said that Chinese Yuan-based cash payments, transactions, anti-money laundering, etc., are increasingly difficult and costly to manage in modern society. And issuing digital currencies can effectively address these issues.

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

In addition, the payment functions of the Internet banking and payment platforms are often down in the event of a poor network signal, while DC/EP's dual offline technology guarantees the use of central bank digital currencies in extreme cases, as with paper money. For example, in the absence of a network, two mobile phones with DC/EP digital wallets can be used to transfer money or make payments by touching them.

Will issuing digital currencies trigger inflation?

Equivalently replacing money in circulation doesn't make the money gross.

The central bank issues digital currency starting with digital currency replacing notes and coins in circulation, assuming that the currency in circulation now is $100, which the central bank digital currency will equivalently replace.

In order to ensure that the central bank's digital currency is not over-issued, commercial institutions pay full and 100% of their reserves to the central bank. That is, at the time of issuance, the People's Bank first converts the digital currency to a bank or other operating institution, which in turn converts it to the public.

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