Page:Progress R&D E-CNY.pdf/5

 public, with the same legal status and economic value. The PBOC will issue e-CNY and physical RMB in parallel, and will take account of both during daily data collection, analysis and management. International experience shows that, as an economy matures, there naturally arises the need for more diversified means of payment. China is a large country with vast territory, large population, multiple ethnic groups and wide differences in regional development. In such a society, people's payment habits, age and security needs vary. Therefore, physical RMB enjoys advantages that could not be replaced by other means of payment. As long as there is demand for the physical RMB, the PBOC will neither stop supplying it, nor replace it via administrative order.

Fourth, as retail CBDC, e-CNY mainly serves domestic retail payment demands. Categorized by user and purpose, there are two kinds of CBDC, wholesale and retail. Wholesale CBDC is mainly issued to institutions such as commercial banks and mostly serve large-value settlement. Retail CBDC is issued to the public for daily transactions. Major countries and economies vary in their priorities of developing CBDC, with some focusing on wholesale transactions and some dedicated to improving the efficiency of the retail system. E-CNY is a retail CBDC issued to the public. With a modern domestic payment system in China, the issuance of e-CNY will fully meet the public's daily payment needs, further improve the efficiency of the retail payment system and reduce the cost of retail payment.

Fifth, in the future digital retail payment system, e-CNY and funds in the electronic account of authorized operators are inter-operable, and both constitute cash in circulation circulation. Commercial banks and licensed non-bank payment institutions that meet compliance requirements (including anti-money laundering and countering terrorist financing requirements) and regulatory requirements regarding risk management on a comprehensive and on-going basis may participate in the e-CNY payment system as per recognition and support of the central bank. They can also fully tap existing payment and other infrastructures while providing digital retail payment services for customers.

2.2 Objectives and visions

The development of China's e-CNY system aims to create a new form of RMB that meets the public's demand for cash in the era of digital economy. Supported by a retail payment infrastructure that is reliable, efficient, adaptive and open, the e-CNY system will bolster China's digital economy, enhance financial inclusion, and make the monetary and payment systems more efficient.

The first objective is to diversify the forms of cash provided to the public by the central bank, satisfy the public public's demand for digital cash and support financial inclusion. As digital technology and electronic payment develop, the use of cash in retail payments has been on a decline. However, it's the mandate of the central bank to ensure the public's direct access to cash, and make sure the unit of account is