Core Viewpoint - The evolution of currency forms is driven by technological advancements and economic development, with a historical competition between official and private currencies. The issuance of central bank digital currency (CBDC) is seen as a necessary upgrade to maintain currency stability and financial system security in the context of digital economy growth [3][4][6]. Group 1: Historical Context and Evolution of Currency - Historical changes in currency forms have transitioned from barter to shells, metal currency, and the world's first paper currency, the Jiaozi, during the Northern Song Dynasty. This was followed by banknotes based on commercial bank credit, eventually replaced by central bank-issued legal tender [4]. - The competition between official and private currencies has always existed, with the absence of central bank currency issuance increasing the fragility of the financial system. Multiple currency issuers can lead to differences in asset quality and currency value, raising transaction costs and reducing stability [4][6]. Group 2: Role of Central Banks - Central banks act as the lender of last resort, providing liquidity to banks in need and ensuring the safety of collateral assets through strict regulation and deposit insurance mechanisms. This supports a stable and secure monetary environment [5]. - The establishment of a legal currency system is a natural selection due to the superiority of national credit over private credit, ensuring currency stability, liquidity, and a fair, secure, efficient, and inclusive payment system [6]. Group 3: Digital Currency Development - The blurring lines between commercial bank currency and central bank currency necessitate the issuance of legal digital currency, or digital renminbi, to ensure the single currency nature of the RMB and maintain financial and monetary system security [6][7]. - The digital renminbi has undergone three phases: theoretical research, closed pilot testing, and open pilot testing, and is being gradually applied in various sectors such as retail, dining, education, and public services [7]. Group 4: Macro and Micro Considerations - On a macro level, the digital renminbi is directly liabilities of the central bank, requiring consideration of enhancing its currency derivation capacity as the economy develops. On a micro level, commercial banks are responsible for wallet management and payment services, necessitating alignment of responsibilities and rights [8]. - Upgrading the measurement framework of the digital renminbi is essential to ensure that the currency supply aligns with economic growth and price expectations, while also enhancing the engagement of commercial banks and users [8].

Core Viewpoint - The evolution of currency forms is driven by technological advancements and economic development, leading to the necessity of central bank digital currency (CBDC) as an upgrade to legal tender [1][2][3] Group 1: Historical Context and Currency Evolution - Historical changes in currency forms include the transition from barter to shell money, metal currency, and the first paper currency in the Song Dynasty, culminating in the current need for CBDC due to advancements in digital economy and payment technologies [1] - The competition between state-issued and privately issued currencies has historically impacted the stability of financial systems, necessitating a unified legal tender to mitigate risks associated with multiple currency issuers [1] Group 2: Role of Central Banks - Central banks act as lenders of last resort, providing liquidity to banks and ensuring the safety of collateral assets through stringent regulations and deposit insurance mechanisms [2] - The evolution of the currency system reflects a shift from private to state credit, with the stability and liquidity of legal tender being paramount principles regardless of technological changes [2] Group 3: Digital Currency Development - To align with the digital economy and ensure the singularity of the RMB, China is advancing the issuance of legal digital currency, known as digital RMB, and upgrading financial infrastructure [3] - The digital RMB has progressed through theoretical research, closed-loop trials, and open trials since 2014, with applications in various sectors such as retail, hospitality, education, and public services [3] Group 4: Framework and Implementation - The digital RMB operates under a macro framework where it is a direct liability of the central bank, requiring 100% reserve backing, which necessitates enhancing its currency derivation capacity as the economy grows [3][4] - Commercial banks are responsible for wallet management, fund security, payment services, and compliance, while the digital RMB's current structure should align responsibilities with rights and benefits [3] Group 5: Future Directions - Upgrading the measurement framework of digital RMB is essential to ensure that the money supply aligns with economic growth and price expectations, while also enhancing the engagement of commercial banks and users [4]

Core Insights - The digital renminbi is currently classified as M0 (cash) and does not earn interest, which may lead to a loss of time value for idle assets held by individuals and businesses [2][3] Group 1: Digital Renminbi Development - The People's Bank of China (PBOC) has made significant progress in the pilot implementation of the digital renminbi, necessitating reforms and upgrades in both theory and practice [2] - The digital renminbi operates under a 100% reserve requirement, meaning that funds deposited into digital wallets are returned to the central bank [2] - There is a need to enhance the monetary derivation capacity of the digital renminbi as the economy develops [2] Group 2: Monetary Framework and Historical Context - Upgrading the measurement framework of the digital renminbi is essential to align the money supply with economic growth and price expectations, while also increasing the engagement of commercial banks and users [3] - Historical changes in currency forms have been driven by technological advancements and economic development, highlighting the need for a legal digital currency to maintain monetary unity and financial system security [4] - The dual-layer operational structure of the digital renminbi is designed to address the integration of central bank and commercial bank currencies, ensuring the maintenance of monetary unity and financial safety [4]