People's Bank of China

“ However, it's the mandate of the central bank to ensure the public's direct access to cash, and make sure the unit of account is consistent in the era of digital economy by digitalizing cash. An e-CNY system will make financial services more accessible, providing fiat money for a large population in various scenarios. Those without bank accounts can enjoy basic financial services provided via e-CNY wallet, and foreign residents temporarily travelling in China can open an e-CNY wallet to meet daily payment needs without opening a domestic bank account. ”

“ Throughout history, the form of currency has evolved from objects, metal coins to banknotes. Such evolution of currency is a result of progress made in science and technology as well as evolution of economic activities. The issuance and circulation of e-CNY is identical with physical RMB, while the value of the former is transferred in a digital form. Thirdly, e-CNY is the central bank's liabilities to the public. Backed by sovereign credit, e-CNY has the status of legal tender.
Second, e-CNY adopts a centralized management model and a two-tier operational system. ”

“ Supported by a retail payment infrastructure that is reliable, efficient, adaptive and open, the e-CNY system will bolster China's digital economy, enhance financial inclusion, and make the monetary and payment systems more efficient.
The first objective is to diversify the forms of cash provided to the public by the central bank, satisfy the public public's demand for digital cash and support financial inclusion. As digital technology and electronic payment develop, the use of cash in retail payments has been on a decline. ”

“ International experience shows that, as an economy matures, there naturally arises the need for more diversified means of payment. China is a large country with vast territory, large population, multiple ethnic groups and wide differences in regional development. In such a society, people's payment habits, age and security needs vary. Therefore, physical RMB enjoys advantages that could not be replaced by other means of payment. ”

“ Framework of design
The design of e-CNY system follows the concept of "safe and inclusive, innovative and user-friendly, and time-evolving." The principles for design are based on a holistic consideration of monetary functions, market demand, supply model, technological support, and cost-benefit. Studies are conducted and revised on currency properties, operating model, digital wallet ecosystem building, compliance and responsibilities, selection of technology roadmap, and regulatory system. ”

“ As the digital economy develops, the share of transactions using cash is declining in China. According to a survey conducted by the PBOC in 2019, the number and value of transactions via mobile payment accounted for 66 percent and 59 percent of the total, while those paid in cash accounted for 23 percent and 16 percent, and those paid by card 7 percent and 23 percent, respectively. Among those surveyed, 46 percent used no cash in any transaction during the survey period. ”

“ Based on centralized management, unified cognition and anti-counterfeiting, the PBOC makes the rules, while authorized operators jointly develop and share apps on mobile devices. They manage wallets, authenticate e-CNY, and develop wallet ecological platforms to enable operator-specific visual system and special features as well as online and offline applications in all scenarios. This aims to satisfy the different types of demands of different users at different levels. Digital wallets must be inclusive and obstacles arising from "digital divide" should be avoided. ”

“ Background of research and development
1.1 The development of digital economy calls for new retail payment infrastructures that are safe, inclusive and adaptive to the digital era.
Currently, as the Chinese economy is shifting from high-speed growth to high-quality development, technological innovation represented by the digital economy has become an important driver of development. ”

“ E-CNY adopts a variety of technologies, including digital certificate system, digital signature, and encrypted storage to make double-spending, illegal duplication and counterfeit, transaction falsification, and repudiation unfeasible. A multi-layer security system has been initially established to guarantee that e-CNY has a safe life cycle and risks are manageable. ”

“ To make Winter Games technology savvy, innovative scenarios were deployed on a trial basis in the premises of the Beijing Organizing Committee for the 2022 Olympic and Paralympic Winter Games, such as unmanned vending carts, automatic vending machines and unattended supermarkets. Wearable devices were developed, such as gloves, badges and Olympic uniforms with payment functions. Most users participating in the pilot tests agree that e-CNY can help improve payment efficiency and reduce costs. ”

“ Digital fiat currency is a new thing. Its impact on the economy and the financial sector can be assessed through pilot tests and practices. The PBOC is carrying out e-CNY pilot programs with the focus on the implications of e-CNY for monetary policy, financial markets and financial stability in the pilot regions. ”

“ Authorized operators assign different types of digital wallets to customers based on the strength of their personal information identification, and set per-transaction and daily limits as well as maximum balance according to the strength of real-name information. The least-privileged wallets can be opened without providing identities to reflect the principle of anonymity. ”

“ Some believe that retail CBDC is more attractive than deposits and may lead to financial disintermediation, narrow banking, and credit squeeze, while others argue that easy availability of CBDC can enhance the transmission of policy rates to the money and credit markets. ”

“ E-CNY adopts two-tier operation whereby the PBOC is responsible for issuance and disposal, inter-institution connect and wallet ecosystem management. Additionally, it prudently selects commercial banks with certain strengths in capital and technology as authorized operators to take the lead in providing e-CNY exchange services. Other commercial banks and institutions, under the PBOC's centralized management, give full play to their creativity, and collectively provide services for e-CNY circulation. ”

“ While performing AML duties, authorized operators and other commercial institutions should protect business secrets, individual privacy and personal information in line with laws, and should not divulge customers' identity data or records of transactions. ”

“ Some commercial institutions even plan to launch global stablecoins, which will bring risks and challenges to the international monetary system, payment and clearing system, monetary policies, cross-border capital flow management and etc. ”

“ Information flow and fund flow could be synchronized, so as to facilitate the advancement of cross-border trade, bolster the development of real economy and meet the regulatory requirements for anti-money laundering and countering terrorist financing. ”