News /Article/

Digital currency has significants advantage over banknotes

At the beginning of August this year, the central bank held a video conference for the second half of 2019. The meeting called for the development of financial technology to strengthen the tracking and research and actively meet new challenges. Accelerate the pace of research and development of China's legal digital currency (DC/EP).

 

The 18th blockchain development status and trend of the Political Bureau of the CPC Central Committee collectively learned, and conveyed good news about the discovery of blockchain technology.

 

It is undeniable that the huge potential of the cryptocurrency market is indeed recognized. As of now, the Central Bank Digital Money Institute has applied for a total of 74 patents involving digital currency.

 

Specifically, the introduction of digital currency by the central bank does not refer to bitcoin nor libra, but to DEEP (digital money electronic payment). It can be seen that the decision-making layer is biased towards the actual payment application, which approximates the physical currency (M0). Alternative, and there is no currency derivation. In order to prevent over-issue, commercial organizations are required to pay a 100% reserve to the central bank, which is the same as the current physical banknote distribution process.

 

But compared to physical banknotes, the digital currency has significant advantages: 1) The replacement of banknotes by digital currency reduces the cost of manufacturing printing, as well as the settlement, escort and disposal of banknotes during the circulation process; 2) Digital currency is easier to track than banknotes. The central bank can use the big data method to grasp the flow of digital currency after data desensitization; 3) Completely eliminate the phenomenon of counterfeit currency, and the central bank can also track the illegal activities (money laundering, fraud, etc.) through digital currency; 4) Improve the strategic position of the RMB digital currency. At present, no country in the world has officially issued digital currency with the central bank credit endorsement.

 

From the perspective of industry influence, the analysis believes that the issuance of digital currency by the central bank is equivalent to the addition of a new type of payment medium, which will bring huge new demand to IT facilities in the areas of issuance, exchange, payment, circulation, etc., and is expected to reshape financial IT. Industry competition pattern. At the same time, it will further increase the penetration rate and scale of electronic payment, and benefit the payment end institutions.