TechFlow News, according to Sina Finance, the International Finance Forum (IFF) 2021 Spring Meeting was held in Beijing. At the forum's session on "Digital Currency and Future Digital Transformation," Yao Qian, Director of the Technology Regulation Bureau at China's Securities Regulatory Commission, stated that central bank digital currency (CBDC) development requires careful consideration across seven aspects:
1. Technical Approach: Account-based or token-based? These two technical paths are not mutually exclusive. In essence, a token is also a form of account—a new type of account known as an encrypted account. Compared with traditional accounts, users have greater control over encrypted accounts.
2. Value Attribute: Direct liability of the central bank, or liability of operating institutions? The key distinction lies in whether end-users’ CBDC holdings or reserve funds from agent operators are recorded under the liability side of the central bank’s balance sheet.
3. Operational Architecture: Two-tier or single-tier? A two-tier structure is gradually becoming a global consensus. The digital RMB also adopts a two-tier operational system. In my view, however, two-tier and single-tier operations are not strictly an either-or choice. We can envision scenarios where digital currencies such as digital dollars or digital yen operate directly on blockchain networks like Ethereum or Diem, allowing central banks to leverage their BaaS (Blockchain-as-a-Service) offerings to provide CBDC directly to users without relying on intermediaries. Single-tier operation could help extend CBDC benefits to unbanked populations and promote financial inclusion.
4. Interest-bearing Design: Currently, the digital RMB does not consider paying interest.
5. Issuance Model: Issuance versus exchange? The difference lies in initiation: issuance is initiated by the central bank (active supply), while exchange is initiated by currency users (on-demand conversion). Whether CBDC creation takes the form of issuance or exchange depends on its intended role and monetary policy requirements.
6. Smart Contracts: Digital currency should not merely simulate physical cash. To fully leverage the advantages of being “digital,” future digital currencies will inevitably evolve toward smart money. However, early experiences have shown systemic disasters caused by security vulnerabilities in smart contracts, indicating that the technology still needs maturation. Therefore, CBDC should start with simple smart contracts, gradually expanding their potential after fully considering security implications.
7. Regulatory Considerations: In the digital world, issues concerning authenticity of digital identity, privacy, security, and broader social governance challenges require deeper research.
Yao Qian emphasized that he has left the People's Bank of China, and his remarks represent only his personal academic views, not those of the PBOC or his current institution.
