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【Observation】Foreigners living in Beijing unbox digital RMB wallets, sharing four highlights of DCEP

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【Observation】Foreigners living in Beijing unbox digital RMB wallets, sharing four highlights of DCEP

Matthew Graham is the CEO of an investment firm in Beijing. He shared on Twitter a screenshot of the testing interface of the Digital Currency Electronic Payment (DCEP) at the Agricultural Bank of China, comparing it with Alipay and the Bank of China app. He also introduced the operation mode of the digital RMB to the Western community, sparking heated discussions.

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Matthew Graham is the CEO of an investment company in Beijing. He shared on Twitter the testing interface of the Digital Currency Electronic Payment (DCEP) in the Agricultural Bank of China, comparing it with Alipay and the Bank of China app. He also introduced the operation mode of the digital RMB to the Western community, sparking intense discussions.

Summarizing his observations on the testing wallet of the digital RMB, Matthew pointed out the following four points:

(1) Testing Regions -
Guangdong Shenzhen, Hebei Xiong'an, Sichuan Chengdu, Jiangsu Suzhou. He believes these four areas were chosen because they are first and second-tier cities and hubs for tech talent. Xiong'an is a special new city located at the triangle center of Beijing, Tianjin, and Hebei Province.

(2) Payment Functions -
Many functions of the digital RMB wallet are similar to Alipay and WeChat, such as scanning, transferring money, and making payments. A unique feature is the offline payment function, which allows for payments through NFC.

(3) Wallet Management + DC Exchange -
These two functions can link to accounts in various banks, allowing users to choose to convert into digital RMB.

(4) Two-tier Design -
The People's Bank of China to commercial banks, commercial banks to consumers. The RMB will be sent to the issuing bank of the digital RMB - the People's Bank of China. Within the central bank, there are digital RMB accounts for commercial banks, which will then issue digital RMB accounts to users, ensuring a 1:1 guarantee with the RMB.

Matthew believes this will eliminate the possibility of excessive issuance of circulating cash since digital RMB is not truly issued but converted. This allows the digital RMB (DCEP) to start from the bottom-up, from users' wallets, rather than being issued top-down from the central bank.

He stated that overall, it is a centralized bank but operates in a decentralized manner, simplifying intermediaries and improving financial currency payment and settlement efficiency. Many transactions may not need to be updated in the central bank's ledger. Transfers between users of the same bank only need to be recorded in that bank's DCEP ledger, as the total sum of DCEP owned by that bank remains unchanged in the central bank's account.

The main service providers are the four major banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank. Additionally, WeChat and Alipay will also be integrated. The customer base of these institutions covers almost all retail users.

Finally, he believes this wallet test shows that China is building the infrastructure for DCEP and looks forward to seeing further developments. Due to the lively discussions sparked by Matthew's posts on Twitter, he also shared some interesting comments from friends in Chinese investment institutions:

A: "Monetary power, especially the power to issue currency, the government will definitely reclaim it."

B: "The power to issue currency has always been with the central bank."

A: "That's for sure. But with the development of the Internet, controlling currency is becoming increasingly difficult."

"The right to circulation is a huge cake, second only to the tax authority. Any interest group in any country will want to control it if they have the ability."

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