The national digital currency of China must be accepted anywhere in China, and no company or individual can refuse to accept the digital yuan. According to the NBK top manager, the digital yuan will be legally positioned as a substitute for China's fiat currency. In addition, the digital yuan "is mainly positioned as an asset M0 (cash in circulation - coins, banknotes)", that is, part of the aggregate of cash - paper notes and coins. Therefore, it must "fully comply with the laws and regulations related to money management."
According to Fan Yifei, according to the regulations on the digital yuan, this asset can be used to pay off "all public and private debts in the country." The national digital currency must be accepted anywhere in China, with "no company or individual can refuse to accept the digital yuan if all conditions are met."
Yifei stressed that the digital yuan must comply with all laws applicable to cash, including the law against money laundering and terrorist financing.
In early September, it was reported that a hardware wallet could be released to use the NBK's digital yuan.
Specifications of the digital yuan
Back in August, representatives of the People's Bank of China said the country's sovereign digital currency was almost ready to launch after five years of development.
Mu Changchun, deputy head of the payment division at the central bank, stressed that a prototype of a digital currency (CBDC, central bank digital currency) is ready, and the department's research group has fully worked out the blockchain architecture for it.
Notably, this announcement was made shortly after the publication of the Libra documentation from Facebook. Thus, it is possible that the Chinese authorities saw some kind of threat in the means of payment from the world's largest social network and accelerated the arms race.
So far, the NBK has not published any official document detailing the operating principles and objectives of the CBDC launch, and information from open sources is fragmented and often contradictory.
Binance Research experts argue that the CBDC circulation mechanism implies the possibility of payments without the need to open a bank account.
The coins will be stored in digital wallets, and the system itself will rely on cryptography and distributed ledger technology (DLT). Nevertheless, there are very few technical details in this regard. However, CBDC is likely to be available through mobile apps, personal computers and smart cards.
As already mentioned, the digital currency will operate within a centralized two-tier system, the fundamental element of which will be the NBK. However, it is not yet clear whether the second tier of this system will be DLT-based.
"Since the management of the second tier will be delegated to financial institutions, the Chinese CBDC could potentially operate on the basis of several networks at the same time," said researchers at Binance Research.
In announcing the final stage of work on the new means of payment, Mu Changchun emphasized that the performance of CBDC will reach "at least 300 thousand transactions per second." This indicator is not yet available to any existing blockchain.