When it comes to the central bank's digital currency, you may have heard that the central bank's digital currency should be based on the real RMB, not a loan currency made out of thin air. The two are just different in form. The former is electronic data, and the latter is RMB paper money. Therefore, some people may think that the central bank's digital currency is a payment method by UnionPay card, Alipay, WeChat payment, POS terminal, etc, But this is not what we call central bank digital currency. So, what's the difference between central bank digital currency and Alipay WeChat? Why does the central bank issue digital currency? Next, let's have a look.

What is the difference between the central bank digital currency and Alipay WeChat?

1. They are different in substance. Digital currency is issued by the central bank, while WeChat and Alipay are just a way of payment. Although the usage scenarios are mostly the same, they are different in nature. The central bank's digital currency wants to replace the banknotes and coins in our hands. This means that the central bank's digital currency is legal currency, which has legal compensation. In other words, digital currency cannot be rejected. In terms of legal rights, its effectiveness and security are the highest.

2. The two liquidators are different. When digital currency is traded, the clearing is in the central bank; When using WeChat and Alipay for transactions, the accounting method, settlement method and audit method behind them are the banking industry.

3. They have different payment functions. Using the central bank's digital currency to pay, we spend digital RMB, just like we spend cash; Alipay and WeChat payment are just payment tools. Even without the Internet, digital RMB can complete transactions. As long as two mobile phones equipped with DC/EP digital wallet touch, they can transfer or pay, while Alipay and WeChat are difficult to pay.

Reasons for the issuance of digital currency by the central bank

1. The needs of the times

From the physical precious metal loan to banknotes, and then from the future digital currency, the evolution of money has experienced a process of continuous alternation and development to the advanced stage. At present, electronic information such as blockchain has been rapidly developed and improved, and the application field of easy to pay and relatively safe currency lending has been realized, which is an irresistible trend of monetary and financial development.

2. Realistic demand for diversified monetary functions

With the development of information network, the functions of money lending are increasing. The current monetary functions are also difficult to adapt to the economic and social development and people's needs for monetary functions in many aspects. At the beginning, the "non trace" and "untraceability" of banknote transaction payment left many loopholes in currency management. For example, the physical currency has many weaknesses in anti money laundering, anti-terrorism financing, anti tax evasion and other aspects, and can not play its important role in the supervision of currency lending. This makes our country spend a lot of energy on anti money laundering, anti tax evasion and anti-corruption every year. After the implementation of digital RMB, it can play a very good role in the supervision of currency lending, because it not only plays a part of the role of blockchain, but also has the function of information center control.

3. The need to improve the quality of currency loans

As we all know, the paper version of the RMB is vulnerable to damage in the circulation process. The defective notes must be withdrawn and burned every year, and new notes must be gradually supplemented and sold. In addition, the anti-counterfeiting also needs to be improved. Therefore, the central banks of each country have increased a huge amount of money issuing fees. At the same time, in real life, because there are many circulation links and touch groups, banknotes have also become the "pathogen" of various diseases. Especially in this year's COVID-19 stage, banknotes will become an effective way of virus transmission. Therefore, it is also an urgent need in real life to sell digital currency, enhance the "contactless" role of currency, make the loan currency free from any pollution in the "circulation", and maintain the "neatness" of currency.

4. The need to avoid the impact of illegal digital currency

At present, various illegal digital currencies, including Bitcoin, have brought a lot of confusion to the currency issuance and management of central banks in various countries, as well as a great impact on the legal monetary system of various countries, especially Libra launched by Facebook in the United States. It not only causes an essential impact on the US monetary system, but also poses a serious challenge and threat to the global fiat currency.

5. The need for RMB internationalization

At present, the People's Bank of China is committed to the intellectualization of the RMB. An important purpose is to promote the RMB to go global. According to its own financial technology research and development capabilities and its own financial infrastructure, it will create a resource advantage for the RMB to face and facilitate international foreign exchange expenditure.

Speaking of this, I believe you have a certain understanding of the difference between the central bank's digital currency and Alipay WeChat, and why the central bank issues digital currency. In general, in the digital era, the economic cost of traditional currency is high. According to the estimation of the U.S. Department of Finance, about 500 billion dollars of cash, accounting for 60% of the total, is circulating overseas in the United States. In addition, cross-border payment with high cost and low efficiency is still a major problem for customers. The central bank's currency loans have the status of legal tender. The central bank's digital currency name has become the preferred digital currency because of convenient liquidation, low issuance cost With good traceability and other advantages, the central bank's digital currency will become a magic weapon for the central bank to operate monetary policy accurately.