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 3.2.6 Safety

E-CNY adopts a variety of technologies, including digital certificate system, digital signature, and encrypted storage to make double-spending, illegal duplication and counterfeit, transaction falsification, and repudiation unfeasible. A multi-layer security system has been initially established to guarantee that e-CNY has a safe life cycle and risks are manageable.

3.2.7 Programmability

E-CNY obtains programmability from deploying smart contracts that don't impair its monetary functions. Under the premise of security and compliance, this feature enables self-executing payments according to predefined conditions or terms agreed between two sides, so as to facilitate business model innovation.

3.3 Design of e-CNY operational system

In line with the central bank's mandates, there are two options to operate digital fiat currency. One is single-tier operation under which the central bank directly provides issuance, circulation, and maintenance services for the general public. The other is two-tier operation under which central bank issues digital fiat currency to authorized operators and then these operators take charge of exchange and circulation.

E-CNY adopts two-tier operation whereby the PBOC is responsible for issuance and disposal, inter-institution connect and wallet ecosystem management. Additionally, it prudently selects commercial banks with certain strengths in capital and technology as authorized operators to take the lead in providing e-CNY exchange services. Other commercial banks and institutions, under the PBOC's centralized management, give full play to their creativity, and collectively provide services for e-CNY circulation. Specifically, under the quota management of the PBOC, the authorized operators open different types of digital wallets for customers based on the strength of customer personal information identification, and provide e-CNY exchange services. In the meantime, to enable secure and effective operation, authorized operators and related commercial institutions jointly provide e-CNY circulation services and retail management, including innovation on payment product design, system development, scenario expansion, marketing, business processing as well as operation and maintenance. The PBOC will try to keep a level-playing field and ensure that the market plays a decisive role in resource allocation. This will incentivize all participants and unleash their creativity, and maintain financial stability. The two-tier system can fully tap authorized operators' advantage in resources, talents, and technology to build a market-driven system that promotes innovation and competition. On top of that, since the public is used to accessing financial services via commercial banks, the two-tier system can increase the public acceptance of e-CNY.

3.4 Design of e-CNY wallet

Digital wallets are the medium of e-CNY that reaches out to users. Based on