We last visited this site, Pekingnology, on February 6 for "Central Bankers: An Interview With The Retired Head of The People's Bank Of China (we missed an anniversary)".
From Pekingnology, February 10:
Yi Gang on China's Digital Yuan
Former Central Bank governor lectures on the theories and practices of China's ambitious central bank digital currency
....MUCH MORE, including video and previous posts on the digital yuan.China appears to be the most ambitious among major economies to develop its central bank digital currency - the digital yuan, and we have covered its development before....*****.... On October 10, 2023, Yi Gang, China’s central bank governor between 2018 and 2023 gave a public lecture at Tsinghua University entitled 数字人民币的相关理论与实践 Theories and Practices Related to the Digital Yuan. The one-hour, videotaped talk gives a comprehensive and accessible introduction, including:
China’s digital yuan follows the principle of "possession equals ownership" just as cash.
Unlike other digital currencies studied by the European Central Bank and other major central banks that are mostly on the “wholesale” path, China’s digital yuan has taken the “retail” path, serving not just between banks and the central bank but penetrating individuals and companies.
The digital yuan does not contradict or replace WeChat Pay or Alipay, China’s dominant mobile payment system run by non-governmental entities.
To ensure the balance of privacy of payment and compliance for anti-money laundering or anti-terrorism financing, the digital yuan adopts a “manageable anonymity” principle, enabling small-amount transfers being conducted in a category of wallets that only require a mobile phone number to open an account, without the need to provide a name and ID number. [Yi appears to omit the fact that China currently requires all Chinese mainland mobile phone numbers registered with a government-issued ID, although admittedly that requirement is outside of the People’s Bank of China’s jurisdiction.]
China’s digital yuan operates under a dual-layer structure in practice. The first layer is the central bank issuing its digital currency to banks, WeChat Pay, Alipay, and major mobile operators. The second layer is these operating institutions providing Digital Yuan services to residents and enterprises. Under such a dual-layer system, the central bank does not directly provide services to individuals and enterprises, thus not changing the original financial service model.
Unlike bitcoins, the management of digital yuan is centralized, due to two reasons: a distributed, blockchain structure can’t cope with high volumes of transactions and the digital currency is the central bank’s liabilities and needs to be managed by the central bank just as cash....
