Corporate and personal wallets are different, in capabilities, limits and other features. The importance of wallets is clear, wallets enforce tiers- low value and low daily limit transactions can be through non-KYCed accounts, without a corresponding bank account.
Wallet standards are developed by the PBOC and select and authorized intermediaries can create their own wallets. Many of the e-CNY aspects are detailed by the PBOC, but it is art of being detailed without revealing much. Prevention of bank-runs is through a zero lower bound (ZLB), but on the more thorny issue of capital flight dependent on political, or geographical instabilities, the PBOC hopes to control it through prudent application of monetary policy controls for cross border transfers, through e-CNY. The unstated challenge to the supremacy of the dollar as an international currency is clear, especially if international agencies are to be involved in leveling the playing field and the stated principle of no disruption. Just having a two-tier system may not be enough as data sharing arrangements may be problematic as is evident from the latest Chinese cybersecurity moves on Didi and other companies. However, PBOC will work with the G20 and other organizations to develop the cross border aspect, taking into consideration the principles of no disruption, compliance and interconnectivity. Internationalization of currency according to the paper is a market selection process, with the utility of the currency being dependent on the economic fundamentals (which are strong in China) and the depth, efficiency and openness of its financial markets (which require improvements in China). If charged phones are available, it can be through touch or contact, as previous communications indicate.Į-CNY is not targeted for cross-border payments, but is technically ready for use in cross-border payments, as cross-border payment involves issues such as monetary sovereignty, foreign exchange policies and arrangements, as well as regulatory and compliance requirements to prevent capital flight.
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e-CNY also supports offline payments- important for locations with spotty or no internet connections, it does not say anything about whether the transfer can be done without electricity. e-CNY is part of M-zero or base money and is an obligation of the PBOC, the safest form of money. The paper draws the comparison between existing payment systems and e-CNY payments. As e-CNY allows immediate settlement, merchants and ordinary people can enjoy immediate liquidity in contrast to credit card or e-Money payments in a cheaper, safe, secure and fair manner. Those without bank accounts can use a e-CNY wallet, foreign visitors can have access to the e-CNY payment infrastructure without a bank account. Throughout this article, the term e-CNY will be used rather than DC/EP or digital Yuan or digital Renminbi.Īn Often Invisible Trend Impacting All Business ObjectivesĪs stated already, the vision for e-CNY fits the evolution, technical and economic of the rapidly changing and expanding Chinese economy, e-CNY is not just an instrument and cannot be separated from its retail payment infrastructure which is meant to be efficient, inclusive and adaptable. According to one commentator, they are gibberish. With this paper, we have a better understanding of motivations and the monetary policy implications of the project.
This has allowed rumor to flourish, with people claiming that the e-CNY is not based on Blockchain for example.
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Another source has been reports on the series of pilots and tests carried out by PBOC across the country. A survey of the Chinese patents granted to PBOC and other organizations have also revealed some information. Until now, this has reached the world as gnomic utterances from Chinese Central Bankers or high officials, translations or research published by various organizations including Binance. This is the first publication of an English language explanation from the PBOC on the important topic of the Chinese digital currency. On July 16th, the Peoples Bank of China (PBOC) released a new progress report on the research and development of e-CNY.
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