In concept, digital currency and electronic payment, or DC/EP is a “two-tier” research and development and pilot project plan of the People’s Bank of China, the central bank. DC/EP is not a payment product.
The DC/EP project plan is like an umbrella or a platform that may encompass or spawn several payment products. Each product can be tested in trials and promoted later.One such product is now formally known as e-CNY, the electronic Chinese yuan or digital RMB.In the two-tier system of DC/EP, the PBOC is on the first tier.
Commercial banks, telecom operators and internet payment platforms are on the second tier.The second-tier entities can cooperate with each other, depending on their understanding of payment products and technical framework.
There are many concepts and operational aspects related to DC/EP that need clear understanding. For example, where should the R&D and pilot programs be guided to? With so many entities involved, how to demarcate roles and responsibilities? How to control the risks in the e-CNY design if/when they arise?All these potential problems are worthy of study. The driving force of DC/EP research and development, pilots and possible promotion in the future will be mainly from the demand side, including the continuous improvement of the payment system, especially the efficiency of the retail payment system.