Digital RMB "cross" to the world
Outside the 2022 Beijing Winter Olympics, in addition to "Bing Dun Dun", there is also a digital RMB. Taking advantage of the Dongfeng of the Winter Olympics, the digital renminbi made its first public appearance at an international event. While facilitating payment and settlement for groups such as overseas athletes, it also accelerated the pace of digital renminbi going global through new scenarios of cross-border payment.
Analysts believe that the current share of RMB in international payments has jumped to the fourth place in the world. With the extension of the use of digital RMB to overseas people, the use of RMB will be more convenient and the prospect of RMB internationalization will be broader.
Rich scenarios help cross-border payment
During the Beijing Winter Olympics, the digital renminbi pilot program covered seven categories of scenarios including transportation, catering and accommodation, shopping consumption, tourism, medical and health care, communication services, and ticketing and entertainment, with about 400,000 landing scenarios. Focusing on future application scenarios, the Beijing Winter Olympics also piloted the deployment of innovative application scenarios such as unmanned vending vehicles, self-service vending machines, and unmanned supermarkets, and launched wearable payment devices such as payment gloves, payment badges, and Winter Olympics payment clothing; for convenience Overseas athletes, coaches, referees and tourists have also launched APP-based wallet services and hardware-based wallet service solutions.
In this regard, Fan Yifei, deputy governor of the People's Bank of China, said that the pilot of the digital RMB Beijing Winter Olympics scene mainly focuses on the payment service needs of the seven key areas of the Beijing Winter Olympics: food, housing, transportation, travel, shopping, entertainment, and medical care. The distinctive pilot scenarios and products facilitate domestic and foreign consumers to use digital RMB payment services.
Zhang Yiping, a macroeconomic analyst at China Merchants Securities, said that the Winter Olympics scenario test is expected to speed up the application of digital renminbi in cross-border payment scenarios, helping to further improve the ranking of renminbi international payments, cross-border payments, new mobile payments, digital renminbi wallets and banking systems. Investment opportunities in the upgrade and other tracks deserve continuous attention.
Similar scenarios are not limited to the Winter Olympics, and the pace of digital renminbi internationalization will also accelerate. As the only region in the country that has piloted digital RMB across the island, Hainan has opened a total of over 10 million personal wallets and over 600,000 public wallets, and nearly 350,000 scenarios have officially launched the pilot program. The "14th Five-Year Plan for the Development of the Financial Industry in Hainan Province" clearly states that it is necessary to carry out a pilot digital RMB cross-border payment and explore to improve the efficiency of cross-border payment in the Hainan Free Trade Port. In addition, the "14th Five-Year Plan for the Development of Shenzhen's Service Industry" also clearly stated that it is necessary to actively participate in the central bank's digital renminbi cross-border payment and international cooperation pilots, and to "actively explore effective ways to convert capital items."
Cheng Shi, chief economist of ICBC International, said that among countries currently issuing or launching digital currency pilot projects, China's economic strength and existing currency strength are at the forefront. The current digital renminbi international cross-border payment has at least three advantages: First, the strong resilience of the Chinese economy, China's growing importance in the global economic system, and the renminbi has become the world's fourth largest payment currency; Instead of sticking to a specific existing technical route, it has extensively absorbed the research and development experience of other countries, and has improved and tested cross-border payments in terms of ledger model and encryption technology; third, the infrastructure is complete, and China's digital payment Habits are in the ascendant, and the high-frequency use makes the facilities and technologies more mature, which is convenient for the promotion and use of digital renminbi.
RMB internationalization requires more "numbers"
China's research on digital renminbi is relatively early. The People's Bank of China established a legal digital currency research group in 2014, a digital currency research institute in 2016, and began to organize commercial institutions to jointly conduct legal digital currency research and development experiments in late 2017. At present, the research and development test has basically completed the top-level design, function research and development, system debugging and other work. Following the principles of stability, safety, controllability, innovation and practicality, some representative regions are selected to carry out pilot tests.
At present, the People's Bank of China's attitude towards promoting the internationalization of digital renminbi is relatively "stable". The "White Paper on the Development of China's Digital RMB" released by the People's Bank of China on July 16 last year pointed out that the digital RMB has the technical conditions for cross-border use, but is currently mainly used to meet domestic retail payment needs. In the future, the People's Bank of China will actively respond to the G20 and other international organizations' initiatives to improve cross-border payments, and study the applicability of central bank digital currency in the cross-border field.
Wen Bin, chief researcher of China Minsheng Bank, said that the internationalization of the renminbi will be gradually advanced along the functions of settlement currency, investment currency, reserve currency, and denomination currency. The digital renminbi conforms to the trend and will make cross-border payments more efficient and convenient, which will help the international community to use more renminbi for settlement, and help accelerate the pace of renminbi internationalization.
Cheng Shi bluntly said that the digital renminbi is a digital form of liabilities of the central bank, and its advantages lie not only in improving payment efficiency, but also in reducing credit risk and liquidity risk exposure based on intermediaries. "The digital renminbi is expected to take advantage of the first-mover advantage to overtake in the corner and promote the leap-forward development of the internationalization of the renminbi."
However, the road to the internationalization of the digital renminbi to boost the internationalization of the renminbi is not an easy one. Cheng Shi believes that in terms of practical operation, there are three main difficulties in the internationalization of digital renminbi: First, international bulk trade is still mainly denominated in US dollars, and most of the payment information needs to go through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. Consider how other countries use digital renminbi for clearing and settlement; second, although 86% of central banks have begun to pay attention to central bank digital currencies, there are still many central banks in major economies that have not formulated plans to launch digital currencies, so it is necessary to consider technology The third is to consider how to distinguish between offshore and onshore digital renminbi, and how to encourage foreign investment to purchase financial products denominated in digital renminbi.
In terms of internationalization path selection, Cheng Shi suggested that the internationalization of digital renminbi can start with Hong Kong, China’s largest offshore renminbi market, to promote the linkage between digital renminbi and digital Hong Kong dollar to achieve technical linkage, and accelerate the promotion of cross-border digital renminbi in Hong Kong. The payment pilot project will gradually extend outward after accumulating practical experience. In addition, it is also a good practice for the People's Bank of China and other central banks to carry out research on central bank digital currency and strengthen international cooperation. It will become an important form of the future international digital currency system. (Wu Li)
