What is the difference between DC/EP and Alipay and WeChat Pay?
Some people may say that central bank digital currency sounds very similar to Alipay and WeChat Pay?
So, what is the difference between central bank digital currency and Alipay and WeChat Pay?
Remember this: central bank digital currencies replace M0. Its functions and properties are similar to banknotes, but in a digital form.
Third-party Internet payments such as Alipay and WeChat Pay are settled in commercial bank deposit currencies and belong to the M1 and M2 levels of digitization. It does not have the legal effect of M0 level and cannot replace M0.
M0: Generally refers to cash in circulation
M1: Generally includes M0 + demand deposits of each unit,
M2: Including M1 + resident savings deposits + corporate time deposits + other corporate deposits + securities company customer deposits.
DC/EP uses a two-tier operating system. Mu Changchun once said that the two-level operating system will not change the creditor-debt relationship of circulating currency. In order to ensure that the central bank’s digital currency is not over-issued, commercial institutions must pay sufficient reserves to the central bank. The central bank’s digital currency remains a liability of the central bank and is controlled by the central bank. Bank credit guarantees have unlimited legal solvency.
In addition, central bank digital currency enables value transfer without the need for an account. In specific scenarios, as long as there is a DC/EP digital wallet on the mobile phone, no network is required, and the transfer function can be realized by simply touching two mobile phones. Traditional electronic payment is useless in an environment without signal, while DC/EP can pay without being connected to the Internet, so both parties are also called "dual offline payment".
"Even Libra can't do this." Mu Changchun said. In addition, the Chinese version of digital currency does not need to be bound to any bank account, getting rid of the control of the traditional bank account system.
Under extreme conditions, such as natural disasters, earthquakes, etc., without the Internet, the use of online banking and third-party institutions will be paralyzed. However, DC/EP’s dual offline technology can ensure that it can be used like banknotes in extreme circumstances.
Also, compare Alipay and WeChat Pay to banks. Your money is held at this bank and all transactions are transferred through the bank. Although Alipay and WeChat are large enough, the possibility of bankruptcy cannot be ruled out. After all, commercial banks can go bankrupt too. In this way, the security of hundreds of millions of user assets cannot be guaranteed. Regulators must plan ahead.
Expert: Most uses will be replaced by cash
标签： #Digital Currency #Currency #Banking
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