E-currency of China is called DC/EP (Digital Currency/Electronic Payment), it is a legal tender in digital form and is issued by People's Bank of China, which is the central bank of China.
Equal to cash (M0)，which means there are no interests when holding DC/EP and no fees when exchanging DC/EP into cash or deposit DC/EP in an account.
Legal tender, any organization or individual must accept DC/EP
Stored in digital wallet (an application on the smart phone) or physical card, can be put into use directly without bank accounts
Double offline payment, both the payee and the payer can complete the transaction offline
Controllable anonymity, under the same supervision as cash is
Unlike other digital currencies like Bitcoin, DC/EP has national credit endorsement and will not depreciate at will.
The cost of issuing DC/EP is cheaper than that of issuing currency.
It is much more convenient compared with holding cash.
DC/EP doesn’t rely on clearing system, the process of payment leads to automatic settlement.
DC/EP can be spent anonymously, any institution or individual other than regulators cannot recognize the counterparties, which means by spending DC/EP the user’s privacy can be well protected as long as he/she doesn’t break the law.
As for regulators, DC/EP can be traceable. Its track can be traced during the circulation process, which will effectively prevent money laundering.
Compared with E-Payments like Alipay:
E-payments belong to the settlement of commercial bank’s deposit; while DC/EP is equal to cash.
E-payments can be settled only when the devices are connected with internet, while DC/EP can be spent offline
E-payments like Alipay or Wechatpay are only payment methods, which means any organization or individual has the right to refuse to accept that; while DC/EP is a legal tender, any organization or individual must accept.
Several internal pilot tests have been carried out across the country like Shenzhen, Suzhou, Chengdu, Xiong’an and Beijing. And the application of DC/EP has expanded to hospital, subway, online shopping, etc. DC/EP was also tested on China’s food delivery and daily deal platform Meituan and China’s biggest car hailing platform Didi, both of which have hundreds of millions of users.
Take the pilot of Beijing for example, in the pilot project, 50000 DC/EP red envelopes were issued to individual consumers by drawing lots. The amount of each DC/EP red envelope was 200 yuan (approximately equal to Rs. 2200). After downloading DC/EP mobile app and open their personal digital wallets, the 50000 lucky consumers can directly receive and use the red envelope without linking the wallet with any bank accounts. The￥200 worth DC/EP can be consumed in the designated 800 offline shops or 2300 online retailers.
With scenarios constantly being expanded and lots of new technologies constantly being applied, the DC/EP pilot will be carried out further in the future.
The writer is CEO, Bank of China, Mumbai. The views expressed in this article are personal and should not be construed as those of the bank.