IMI–Hande Fintech Salon (No. 7): The Design of Digital Currencies and the PBoC's Strategy

On March 8, IMI-Hande Fintech Salon (No. 7) was held in Renmin University of China. Duan Xinxing, vice president of OKCoin gave the keynote speech entitled “The Design of Digital Currencies and the PBOC’s Strategy”. The meeting was presided over by Prof. Su Zhi. Mr. Duan introduced the origin of bitcoin and the block chain, and he summarized several features of bitcoin. First, it is a new transaction medium which is not based on bank accounts or third parties. For example, both Wallet and Zcrash—two ways of bitcoin transactions are based on wallets and keys, instead of third parties. Second, bitcoin involves multiple block chain nodes, which are used for saving information. Even if one of them is under attack, others will fill in. Third, the clearing and settlement process is finished in one node, which is very convenient. By contrast, traditional process requires many procedures and steps, making it more complicated. Mr. Duan believed that bitcoin and the block chain share the same structure. However, this does not mean that the block chain can be applied to all bitcoin transactions. This technology can be mainly used for large-sum transactions, complicated transactions, and the integration between different databases. Then Mr. Duan pointed out that Yao Qian from Technology Department of PBoC and Wang Yonghong from Clearing Center of PBOC mentioned the concept of “one currency, two databases, and three centers.” “One currency” represents a digital RMB issued by the PBOC. It is calculated and issued on a unified basis, which is different from non-sovereign digital currencies. “Two databases” means data for digital RMB is saved both in local and the PBOC’s databases. This differs from traditional digital currencies which are held by individuals. “Three centers” means a digital RMB involves multiple centers, so that people may not lose their money when they lose their passwords. This measure is also aimed at anti-money laundering and anti-terrorism financing. In the end, Mr. Duan shared his views on China’s digital currencies. He believed the PBOC cannot issue digital RMB recently for three reasons. The first is network coverage. People in some areas like Tibet still have no access to network. The second concerns encryption and security. Once the transaction system in the upper level goes wrong, it may damage the whole country’s reputation severely. Third, we must establish a new system for digital currencies, and this takes time. So for digital currencies, we need to be both positive and prudent.  

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