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Chief Analyst of Guosen Securities Financial Industry: Central Bank R&D is a kind of digital cash, not a digital currency independent of the RMB.

Tuesday, October 1st, 2019

Wang Jianwen, chief analyst of the financial industry of Guosen Securities Economic Research Institute, analyzes how to understand the central bank's1 digital currency2. Wang Jian pointed out in the article that the emergence of Bitcoin means a new currency different from the sovereign currency of each country. Bitcoin is based on blockchain technology. There is no single issuer, and all transactions are recorded at all nodes of the network, which is difficult to tamper with. Bitcoin also wants to control its circulation and maintain its currency by limiting the amount of future issuance. But precisely this kind of goodwill has deviated from the essence of money. This new type of digital currency, which is completely different from the original sovereign currency, is called "digital currency.” Obviously, central banks that have the right to issue currency rights in various countries will not welcome this new thing aimed at depriving them of their currency distribution rights. Therefore, it is obvious that the central bank is researching to launch digital cash, not digital currency. Although it caters to the public, it is also called "digital currency.” At the end of the article, Wang Jian also indicated that although Bitcoin itself has deviated from the essence of money3, the introduction of blockchain technology has made it possible to control the risk of double-spending. The application of the blockchain enables the entire network to identify the only transaction, thus basically eliminating the risk of illegal copying of digital cash, and greatly improved the security of circulation. Adding the function of the smart contract and some personalized functions of the transaction could also help the currency circulation, reduce transaction costs, and improve the service level of the payment link. Therefore, he believes that the central bank is developing a digital cash that uses a new circulation technology rather than a digital currency independent of the RMB.

Source: https://www.8btc.com/article/489732

  1. 'Central Bank of China', which develops and implements monetary policy in China []
  2. This is the specific project referred by by 'R&D' in the title.  The translator clarified when asked what the name of the project might be: It is not mentioned in the article, but as far as I know, the central bank set up a specific team several years ago, called Digital Currency Research Department, focus on researching Digital Currency. And recently the Central Bank announced they researched and developed a digital currency, which is a kind of digital cash. The entire article is talking about Wang Jian's interpretation of the digital currency which is researched and developed by the Central Bank. []
  3. Bitcoin is deviant, you see!  And money has an essence, and I, Wang Jian, know what it is! []