The digital RMB carries a glorious mission, holds significant importance, and faces urgent timelines. It is essential to summarize experiences, eliminate falsehoods, innovate boldly, and accelerate its rollout to establish an internationally leading advantage, thereby actively promoting the formation of a new international monetary and financial system and order.
Since May 2025, the U.S. and Hong Kong have competed to advance legislation on stablecoins and crypto-assets (digital assets). Concurrently, the U.S. has pushed for laws prohibiting the issuance of a digital dollar, sparking a global wave of stablecoin and crypto-asset legislation and development. This has also ignited debates in China on whether to prioritize legislation for a RMB stablecoin or continue advancing the digital RMB.
Subsequently, the People's Bank of China (PBOC) announced plans to refine the digital RMB’s positioning within the monetary hierarchy (moving beyond its initial M0 classification) and optimize its management framework (establishing international and domestic operational centers in Shanghai and Beijing). On November 28, the PBOC and 12 other agencies jointly convened a meeting to combat virtual currency speculation (referring to crypto-assets), clarifying that stablecoins fall under virtual currencies and reaffirming China’s ban on such assets and related illegal financial activities.
Thus, China’s commitment to advancing the digital RMB while curbing virtual currencies is now unequivocal. However, this stance has exceeded many expectations and remains contentious. To address this, it is crucial to articulate the rationale behind suppressing virtual currencies (see Wang Yongli’s December 5 article, "Why China Firmly Halts Stablecoins") while accelerating the digital RMB’s innovation and global adoption to establish its unique advantages in international payments.
**Understanding the Digital RMB’s Essence and Positioning** The digital RMB emerged against the backdrop of Bitcoin’s rise in 2009 and Ethereum’s 2013 launch, which popularized decentralized currencies. By 2014, central banks worldwide, including China’s, began researching central bank digital currencies (CBDCs) to counter this trend. China initially termed its project "DCEP" (Digital Currency Electronic Payment) but later rebranded it as the digital RMB (e-CNY), positioning it as a digitized M0 (cash replacement) with centralized issuance and management.
However, confining the digital RMB to M0 has proven problematic, limiting its supply, application scenarios, and appeal compared to mobile payments. Pilot programs revealed poor cost-benefit outcomes, delaying its official launch. A reevaluation is necessary to align its design with monetary principles:
1. **Credit and Digital Currencies Are Inevitable**: Money’s core functions—value measurement, exchange medium, and credit backing—demand it evolve toward digitization to enhance efficiency and stability. 2. **Distinguish Money from Its Forms**: Currency has transitioned from physical (e.g., shells, metal coins) to credit-based forms (e.g., deposits, e-wallets), but its essence remains unchanged. 3. **Central Bank Money ≠ Cash**: In credit systems, money is primarily issued via credit (deposits), not cash. Digital RMB should mirror this, enabling broader financial use, including interbank清算. 4. **Digital ≠ Physical Cash**: Unlike cash, digital RMB operates via encrypted accounts with tiered verification, managed by institutions, not holders.
**Innovating to Accelerate Digital RMB Development** Key advancements for the digital RMB include: 1. **Unified APP for Account Management**: Ensuring PBOC oversight by linking all digital RMB accounts via a central app, enabling data aggregation for anti-crime and monetary policy purposes. 2. **Blockchain for Efficiency/Security**: Adopting distributed ledger and smart contracts to enhance system resilience, with multi-institutional participation. 3. **Digital ID Integration**: Binding digital RMB accounts to national digital IDs to ensure user authenticity and data security, leveraging China’s领先 technology. 4. **Domestic/Offshore Versions**: Tailoring rules to jurisdictional needs, with跨境清算 via platforms like mBridge or公链 gateways. 5. **National Strategic Push**: Elevating digital RMB to a state-level project under centralized leadership to expedite development amid global competition.
**Conclusion** The digital RMB’s success hinges on clarifying its本质, embracing innovation, and integrating with digital infrastructure. As a national priority, it can bolster China’s monetary sovereignty and reshape global finance.
*Wang Yongli, Economics PhD and Co-Chairman of Digital China Group, is a former PBOC executive and expert in monetary policy, digital finance, and blockchain.*
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