What is DC/EP?

4 min readJun 30, 2020


本文是《DC/EP — — 人民币国际化的又一次尝试》系列的第三篇。DC/EP意味着人民币向新形态国际货币的一大迈步。

DC/EP is a digital form of the renminbi, the paper bill issued by the People’s Bank of China. It is another exploration of the internationalization of the RMB by the Chinese government, which is committed to building a new secure, reliable and smart payment system for the world.


What is CBDC?


CBDC, known as Center Bank Digital Currency, or Central Bank Digital currency: CBDC is a digital currency issued by the Central Bank with the following characteristics.

CBDC,全称为Center Bank Digital Currency,即中央银行数字货币。CBDC是由中央银行发行的数字货币,具备如下特征:

(i) Legal tender, which is essentially digital in nature and needs to be included in the M2 statistics.

(1) 本质上是数字化的法定货币,需要被计入M2的统计口径;

(ii) Issued by the Central Bank and also recycled and destroyed through the Central Bank.

(2) 由中央银行发行,也通过中央银行回收销毁;

Viewed in this way, CBDC is essentially the use of paper money that does not use banknotes, a type of national sovereign digital currency.


By using the CBDC, the central bank will have the ability to track the flow of money, ensure the legitimate use of funds, and eliminate counterfeiting and money laundering. At the same time, central banks can also use CBDC to export sovereign credit to other countries through cross-border trade settlement and promote the internationalization of the currency.


At present, in the field of CBDC, only China’s DC/EP has conducted substantial application testing, while other countries’ CBDC is still in the Research or development phase. At present, major developed countries or economies of the world, including the EU, the UK, the US, Japan and Korea, are conducting research or development on CBDC. development. After analysis, the main reason for this is that the use of digital currencies makes it cheaper to issue money while better restraining the currency Criminal acts such as manufacturing counterfeit money, money laundering, etc.


What is DC/EP


DC/EP, known as Digital Currency Electrical DC/EP is issued by the People’s Bank of China and is digital fiat currency The company has adopted a centralized management system.

DC/EP,全称为Digital Currency Electrical Payment,即电子支付的数字货币。DC/EP由中国人民银行发行,是数字化的法定货币,采用中心化管理体系。

E-commerce in China has been developed from a very high level, and the penetration of electronic payments has reached a world-leading level in the current electronic Tencent, Alibaba and UnionPay have more than 85% of the market share in the payment market. However, from an application point of view, the essence of existing electronic payments is to transfer existing fiat currency in different bank accounts. It is essentially the same as a bank transfer and there is no way to trace the origin of the currency.


DC/EPs are issued under a two-tier structure, with the central bank first exchanging them for specific commercial banks responsible for the circulation of the currency, and then the commercial banks. It is exchanged for the end-user of the currency and put into circulation. The user can make a down payment through the digital wallet of a specific commercial bank.


As a digital currency based on blockchain technology, the DC/EP will have at least the following characteristics.


(1) Transactions are anonymous and as secure as paper money transactions.


(2) Traceability of transactions and financial flows, which is used mainly by the central bank to enhance the security of the currency.


(3) Transaction payments can be equipped with smart contracts to improve transaction efficiency.


(4) May be used as a cross-border settlement instrument.


(5) May be included in the M2 statistics.


(6) Lower issuance/conversion costs than traditional currencies.


Prospects for DC/EP applications


The launch of DC/EP carries the Chinese government’s expectation for the internationalization of the RMB, and the attributes of digital currencies make DC/EP a wide application prospect.


(1) Promoting the internationalization of the RMB、


Due to the traditional geopolitical factors, the internationalization of the RMB has been difficult, and the Chinese RMB has not been able to achieve its proper status in the international arena.


(2) Loading of smart contracts improves the efficiency of economic transactions


Traditional transactions require the disbursement of funds on a contractual basis, and the disbursement of funds often needs to be done manually one at a time and according to the progress of the contract. The comparison is resource-intensive. If a smart contract is loaded at the time of payment, the funds can be automatically paid at a specified point in time after the realization of a particular situation.


Another effective application scenario for smart contracts is in micropayments. Currently, micro-payments do not provide a valid record of transactions to track transactions, and if problems arise they cannot be properly traced back to past transactions. transactions. The introduction of smart contracts provides an effective solution to this scenario by effectively tracking information, setting up reasonable payment conditions, leading to the identification of small transactions and the documentation of evidence of potential conflicts.


(3) Significant reduction in currency crimes


DC/EP based on blockchain technology perfectly integrates the advantages of traceability of blockchain digital currency transactions. On top of this, central banks can easily trace the recipient and the payer of each digital currency and the substance of the corresponding transaction, which is also It makes traditional currency crimes such as money laundering invisible.


Also considering that digital currencies themselves can only be issued by banks and are not circulated in the market in the form of paper money, etc., this means that for DC The counterfeiting of /EP can only be cloned or stolen by IT means. Due to the ability of central banks to track digital currencies, it is also almost impossible to hide.


Therefore, with the introduction of DC/EP, there will be a significant reduction in currency crime because there will be nowhere to hide.





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