Currency not cryptoĪ key question that often comes up is what is the difference between a central bank digital currency (CBDC) and a cryptocurrency or money transferred between banks? The key difference is that the CBDC is comparable to physical notes/coins and will be classified as such (M0 in central bank money terminology). Law enforcement agencies will have the power to match transactions with personal information if illegal activity is detected. Meanwhile the tier system means that while the PBOC keeps a record of all e-CNY transactions, others hold the personal information of the e-CNY holder. Anonymous sub-wallets with the holder’s main digital wallet will allow users to transact without revealing private information to counterparties and payments companies. Users of e-CNY will be able to set up wallets and transact in small amounts with just a phone number, with higher limits requiring more personal information. The PBOC has described this as “managed anonymity” following the principle of “anonymity for small value and traceable for high value” transactions. Officials have been vague around the technology used, although it is understood to be centralised account-based rather than blockchain, with transactions (notably large ones) expected to be traceable (data is everything in the modern economy). Also, its use in cross-border payments and internationalisation of the renminbi would allow China to lessen its reliance on the US dollar-based system. So what is the purpose of e-CNY? There are several advantages for users and the state, which we will build on later but the principal strategic goals are facilitating the ongoing move towards a digital economy, enhancing financial inclusion, improving efficiency, strengthening control and supervision of the financial system and ensuring the renminbi remains the dominant currency in China, fending off threats from private currencies such as Bitcoin or overseas digital currencies. Alipay and WeChat Pay will essentially have to give up their competitive moats on merchants and individual data but the parent companies are expected to get to preserve their expertise in technology and gain access to government-related business opportunities. The expectation is that the e-CNY will generate competition. The e-CNY will coexist with Alipay and WeChat Pay (the two largest payment providers, respectively part of Alibaba and Tencent), which currently dominate China’s payment system with a near duopoly. Other banks and payment service providers will be classed as Tier 2.5 institutions, able to provide services to e-CNY users. These Tier 2 institutions can disseminate e-CNY issued by the People’s Bank of China, which represents Tier 1 at the top of the pyramid. These players will be classed as Tier 2 institutions, through which the public can open e-CNY accounts/wallets. First, a small number of large distributors gives it both control and confidence that the distributors can scale up operations and, second, that data remains secure. The six major state-owned banks (Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Industrial and Commercial Bank of China, and Postal Savings Bank of China), together with the two largest internet banks (WeBank, backed by Tencent, and MY-Bank, supported by Alibaba’s Ant Group) are involved. The PBOC has actively involved a number of large financial institutions in its early rollout.
#Slow burn hendersonville Offline
Each of the test cities served a different purpose: for example, Beijing tested conversion of the digital currency into cash and vice versa Shenzhen’s younger consumer market tested the rigour of small ticket high frequency transactions and the city was also used to test cross-border usage with Hong Kong residents and Suzhou tested near field communication (NFC) payments and offline transactions. Many of these are only at the preliminary stages, whereas China has already field tested its digital currency within major cities. To China’s credit, the PBOC is well ahead of most western central banks. The PBOC is targeting broad coverage of China’s population, which could reshape the payments industry over the coming years.
Expectations are that an official launch could coincide with the February 2022 Winter Olympics in Beijing – which would offer a useful marketing ploy to showcase China’s technological prowess.
The project has been seven years in the making, with a research group first formed back in 2014. The People’s Bank of China cannot be accused of hurrying the Digital Currency, Electronic Payment (DCEP) project, the acronym for its central bank digital currency, which is likely be known by the market as e-CNY when it officially launches.
0 kommentar(er)
