Short Insights

• The digital RMB system has completed its top-level design and standards under the grounds of certain factors.
• The relevant person in charge of the Digital Currency Research Institute of the People’s Bank of China stressed on the fact that the digital RMB has not been officially issued. 
• The digital currency of China’s central bank claims that it is different from digital currencies like Bitcoin.
• The digital currency will not be issued in excessive quantities and will not be promoted in a short period to avoid causing inflation.

What is the digital currency of China’s central bank?

The advancement of China’s legal digital currency research and development has triggered extensive concern in society. The associated person in charge of the Digital Currency Research Institute of the People’s Bank of China recently made an assertion. He stated that there is steady progress currently in the research and development of digital RMB. It is reported that internally secured pilot tests will be performed in Shenzhen, Suzhou, Xiong’an New District, Chengdu, firstly. Succeeding which, the future Winter Olympics scene for the continuous optimization and improvement of Features.

The People’s Bank of China began its research on legal digital currency in the year 2014. The digital RMB system has completed its top-level design and standards under the grounds of certain factors. The factors include double-layer operation, currency substitution in circulation,  controllable anonymity Formulate, function research, and joint debugging and testing. It has also followed the principles of stability, security, and innovation.

The relevant person stressed on the fact that the digital RMB has not been officially issued. The online DC/EP information currently adds to the trial content in the technology research and development process. The closed testing of digital RMB will have to affect neither the listed institutions’ commercial operation nor the RMB issuance and circulation system. Also the financial market and social economy will not be affected.

How to use the Chinese version of digital currency?

The People’s Bank of China’s digital currency is the electronic form of RMB. The digital currency of the Chinese central bank claims that it is different from the digital currencies like Bitcoin and others. This digital currency is referred to as be forensic. Since its launch has national credit approval.

In addition to that, the approval of the state makes the central bank’s digital currency more stable. This digital currency is also compared with Bitcoin. The Source added that Bitcoin does not own the currency value stability.

According to the usage scenarios, this digital currency does not pay interest, and hence, could be used in high-frequency business scenarios. The sources add that there exists no difference between this digital currency and paper money. Simultaneously, regulations regarding cash management, anti-money laundering, etc. must be followed.

What are the advantages of digital RMB?

A senior industry insider has reported that RMB Cash transactions and payments have become tougher to control in modern society. Also, its cost has increased immensely. Therefore, it is believed that the digital currency issuance will be the solution to the above problems.

When there are poor network signals, the payment processes of online banking become disabled. Hence, DC / EP’s dual offline technology will ensure that the central bank’s digital currency functions as paper money. 

Will the digital currency’s issuance induce inflation?

The digital currency of the central bank will firstly replace the circulation of banknotes and coins. To guarantee the absence of the central bank’s digital currency overselling, the commercial institutions will pay 100% reserve to the central bank. In other words, the digital currency of the People’s Bank of China will be first exchanged with banks and operating agencies. Following this, the agencies will exchange digital currency with the public.

Also the digital currency will not be issued in excessive quantities and will not be completely promoted in the short term. This is a result of the consideration of the previous digital currency’s limitation to pilots. The rate of currency circulation will also maintain a normal level. Hence, no cause of inflation by the digital currency.

Umme Haani