Core Viewpoint - The article discusses the need to adjust the functional positioning of the digital renminbi (RMB) from M0 (cash) to M1 and M2, suggesting that this change could enhance its usability and competitiveness against non-bank payment platforms like Alipay and WeChat Pay [3][4][10]. Group 1: Current Status and Limitations - As of July 2024, the digital RMB app has opened 180 million personal wallets, with a total transaction amount of 7.3 trillion yuan across 26 regions [3]. - The current M0 designation limits the digital RMB's ability to earn interest and restricts its monetary creation capacity, leading to a lack of incentive for individuals and businesses to adopt it [4][6][7]. Group 2: Proposed Adjustments - Four key adjustments are suggested: 1. Explore a partial reserve requirement system instead of the current 100% reserve requirement [11]. 2. Allow interest on balances held in digital RMB wallets to incentivize holding [11]. 3. Enable commercial banks to use digital RMB as a liability for loans and investments [11]. 4. Transition from a retail-focused to a wholesale central bank digital currency model [11]. Group 3: Future Applications and Infrastructure - The digital RMB is expected to evolve into a fully functional currency, capable of performing all five key monetary functions [12][13]. - Future applications may include investment in financial products like stocks and bonds, as well as broader B2B applications in supply chain management and trade financing [16][17]. - A robust infrastructure for clearing and settlement will be necessary to support the digital RMB's expanded role [14]. Group 4: Cross-Border Payment Advantages - The digital RMB's use of blockchain technology allows for efficient cross-border payments by synchronizing information and funds, potentially bypassing traditional systems like SWIFT [20][21]. - Current applications in cross-border payments include transactions in commodities such as oil and soybeans, with a focus on reducing costs and improving efficiency [22][23]. Group 5: Impact on RMB Internationalization - The cross-border use of digital RMB is seen as mutually beneficial for both the digital currency's adoption and the internationalization of the RMB [25][26].

Core Viewpoint - The report suggests that the functional positioning of the digital RMB should be adjusted to enhance its application and competitiveness against non-bank payment wallets like Alipay and WeChat Pay [1][2]. Summary by Sections Current Status and Challenges - As of July 2024, the digital RMB app has opened 180 million personal wallets, with a total transaction amount of 7.3 trillion yuan across 26 regions [1]. - The current M0 positioning limits the digital RMB's functionality, as it cannot earn interest and is subject to a 100% reserve requirement, reducing the incentive for individuals and businesses to use it [2][3]. Recommendations for Adjustment - Zhang Jianhua recommends transitioning the digital RMB from M0 to M1 and M2, allowing it to earn interest and enabling the development of financial products [2][7]. - Four key adjustments are proposed: 1. Explore a partial reserve requirement system, potentially aligning with the current 5%-7.5% statutory deposit reserve ratio [8]. 2. Allow commercial banks to pay interest on balances held in digital RMB wallets, incentivizing users to hold digital RMB [8]. 3. Enable commercial banks to use digital RMB as a liability for loans and investments, facilitating its monetary derivation function [8]. 4. Shift the digital RMB from a retail to a wholesale central bank digital currency, expanding its application in interbank transactions [8]. Future Applications and Infrastructure - The digital RMB is expected to evolve into a fully functional currency, capable of performing all five key monetary functions [10][11]. - A robust infrastructure for clearing and settlement is necessary to support the digital RMB's operations, requiring upgrades to the current statistical systems [11]. - The digital RMB's application is anticipated to expand significantly, particularly in B2B scenarios, such as supply chain management and trade financing [15][16]. Cross-Border Payment Advantages - The digital RMB offers advantages in cross-border payments, such as simultaneous information and funds transfer, reducing costs and increasing efficiency [17][18]. - Two primary models for cross-border payments are identified: the mbridge platform for multilateral cooperation and a bilateral model through local branches of Chinese banks [19]. - The cross-border use of digital RMB is expected to promote the internationalization of the yuan, creating a mutually beneficial relationship [20].