What is the difference between China's DC/EP and the G7 central bank digital currency? Zhou Xiaochuan said

Source: Beijing News Reporter: Cheng Weimiao Editor: Xu Chao

Beijing News Shell Finance (Reporter Cheng Wei Miao) "The digital economy accounts for a growing proportion of the economies of various countries, and digital currency has become an important issue. China is at the forefront of the world in the research and development of digital currency. The DC/EP under development and the central bank digital currency recently announced by the Group of Seven (G7) and the Bank for International Settlements have significant differences in definition." According to the official WeChat account of the Boao Forum for Asia on October 28, on October 27, at the second Budapest Eurasia Forum hosted by the Hungarian Central Bank, Zhou Xiaochuan, Chairman of the Boao Forum for Asia, said this.
The central bank digital currency principles mentioned by Zhou Xiaochuan come from the report "Central Bank Digital Currency: Basic Principles and Core Features" jointly released by the G7 central banks and the Bank for International Settlements on October 9. The report lists three basic principles for central bank digital currency: any issuance must not undermine monetary and financial stability; coexist with cash and other forms of currency in a flexible and innovative payment system; the characteristics of central bank digital currency should benefit innovation and efficiency.
Its core features include: resilience and security; convenience and low or no cost to end users; based on a clear legal framework and appropriate standards; and an appropriate role for the private sector to promote competition and innovation. Although focused on meeting domestic policy objectives, the report also focuses on the cross-border and international dimensions of central bank digital currencies, and mentions that some countries may face a "digital dollarization" situation.
Zhou Xiaochuan said that the G7 attaches more importance to cross-border payments and dealing with Libra, while DC/EP (full name "Digital Currency/Electronic Payments") attaches more importance to improving the domestic retail payment system. The G7 hopes to find the best solution for central bank digital currency, while DC/EP is a two-tier, dynamic medium-term evolving system. DC/EP gives greater enthusiasm to the second-tier institutions and requires them to bear more responsibilities.
In his article "Analysis of the Policy Implications of Digital RMB M0 Positioning" published in September 2020, Fan Yifei, deputy governor of the central bank, and Mu Changchun, director of the Digital Currency Research Institute of the central bank, recently emphasized the two-tier operating system of my country's digital RMB and the centralized management model of the central bank in Shanghai. In this system, the central bank occupies a central position in the digital RMB system, responsible for wholesale digital RMB to designated commercial banks and full life cycle management, and commercial banks and other institutions are responsible for providing digital RMB exchange and circulation services to the public.
Fan Yifei and Mu Changchun both pointed out that the centralized management of the digital RMB is conducive to resisting the erosion of encrypted assets and global stablecoins, preventing the currency issuance rights from being lost in the digital economy era, and improving the efficiency of the payment system and the transmission of monetary policy. Realizing payment and settlement and improving the capital turnover efficiency of merchants will help solve the liquidity problems of small and medium-sized enterprises, increase the speed of currency circulation and the efficiency of monetary policy implementation. It is also conducive to breaking down retail payment barriers and market segmentation, avoiding market distortions, protecting the rights and interests of financial consumers, and promoting inclusive finance. In addition, by adopting a controllable anonymity mechanism, the People's Bank of China has full information, and can use big data, artificial intelligence and other technologies to analyze transaction data and capital flows, prevent and combat illegal and criminal activities such as money laundering, terrorist financing and tax evasion, and effectively maintain financial stability.
Beijing News Shell Financial Reporter Cheng Weimiao Editor Xu Chao Proofreader Wei Zhuo