Author: Zhang Feng
In recent years, the research and pilot work of the digital renminbi has been continuously promoted, gradually transitioning from concept to practical application. By the end of 2025, the People's Bank of China issued the "Action Plan for Further Strengthening the Management Service System of Digital Renminbi and Related Financial Infrastructure Construction" (hereinafter referred to as the "Action Plan"), which clearly states that starting from January 1, 2026, the digital renminbi will officially transition from the "digital cash" era to the "digital deposit currency" era. This statement not only reflects a change in terminology but also signifies a profound transformation of the digital renminbi in terms of its monetary essence, operational mechanism, and legal attributes.
1. Legal Attributes: From Central Bank Liabilities to Commercial Bank Liabilities
Digital cash is essentially a digital form of cash, representing a direct liability of the central bank to the public. The Bank for International Settlements defines it as "digital cash issued by the central bank based on value/blockchain models," while the European Central Bank emphasizes that it is "a central bank liability provided to citizens and businesses for retail payments in digital form." This means that digital cash, like physical cash, does not involve the credit creation process of commercial banks and does not fundamentally rely on financial intermediaries in circulation.
In version 2.0, the digital renminbi is repositioned as digital deposit currency, possessing the attributes of commercial bank liabilities. According to the "Action Plan," the balance in the digital renminbi wallet opened by users at commercial banks is regarded as a deposit liability of the commercial bank, included in the base for reserve requirements, and protected by the deposit insurance system. This positioning aligns the digital renminbi with traditional bank deposits in the monetary creation chain, making it part of the "central bank - commercial bank" dual-layer monetary system, rather than merely a direct liability of the central bank.
This shift has profound financial implications, as it allows the digital renminbi to truly integrate into the modern credit monetary system, maintaining the singularity of currency while avoiding "financial disintermediation" and a decline in the money multiplier due to the large-scale replacement of deposits by digital cash.
2. Account Characteristics: From "Wallet" to "Account + Wallet" Integrated Architecture
Although digital cash possesses flexible forms such as software wallets, hardware wallets, and online and offline payments, its underlying logic remains centered on "coin strings," emphasizing individual ownership and control, as well as disintermediation. Digital cash under the blockchain model tends to favor a paradigm of "value storage and transfer," relatively independent of the banking account system.
The digital renminbi adopts a "hybrid architecture" in its design, namely "account system + coin strings + smart contracts." It does not detach from the existing banking account system but undergoes a digital upgrade based on it. This is manifested in:
Account-based foundation, meaning that the digital renminbi wallet is essentially a new type of bank account, characterized by strong real-name verification, recognizability, and regulatory oversight, integrated into the existing banking business system.
Compatibility with hardware and offline payments, meaning it retains the flexibility of digital cash, supporting various wallet forms and dual offline payments to meet different scenario needs.
Combination of centralized and distributed systems, relying on centralized systems to ensure efficiency and compliance in most retail and wholesale scenarios; in scenarios requiring multi-party collaborative trust (such as cross-border payments and supply chain finance), blockchain technology is used to achieve information synchronization and equitable responsibilities.
Thus, it can be seen that the digital renminbi is not a simple digital simulation of cash but a comprehensive digital reconstruction of the monetary account system.
3. Programming Capability: From Payment Tool to Programmable Financial Infrastructure
The core function of digital cash is to achieve peer-to-peer value transfer. Although some designs support basic scripting functions, its programmability is limited, focusing more on the transaction itself rather than the automation of transaction conditions and processes.
The digital renminbi, on the other hand, has built-in smart contract capabilities, enabling the digitization and mandatory automatic execution of contracts. This upgrades it from a passive "payment tool" to an active "programmable currency," capable of embedding business logic and compliance rules in transactions. For example:
Precise fund management, in scenarios such as prepaid consumption, supply chain finance, and government subsidies, smart contracts enable targeted fund usage and condition-triggered payments, effectively preventing misappropriation and fraud.
Serving the "Five Major Financial Articles," in areas such as green finance, inclusive finance, and pension finance, programming enables automatic settlement of carbon credits, precise drip irrigation of inclusive loans, and phased distribution of pensions in complex scenarios.
Cross-border payments and compliance, in the "Multilateral Central Bank Digital Currency Bridge," smart contracts enable automatic compliance execution and real-time settlement across jurisdictions.
This programmability makes the digital renminbi a "regulatory-friendly, business-flexible" financial infrastructure, far exceeding the functional scope of traditional cash.
4. Regulatory Model: From Anonymous Circulation to Full Lifecycle Penetrative Regulation
Due to its cash-like anonymity and peer-to-peer circulation characteristics, digital cash poses significant challenges for anti-money laundering, anti-terrorist financing, and anti-tax evasion. Although the central bank is the issuer, it is difficult to effectively monitor specific transactions in circulation.
The digital renminbi constructs a penetrative regulatory system covering the entire lifecycle of issuance, circulation, and redemption, characterized by:
Separation of management and operation. The People's Bank of China has established a digital renminbi management committee responsible for rule-making and functional supervision; the Digital Currency Research Institute has set up an operation management center and an international operation center responsible for system construction and safe operation. This ensures regulatory authority while maintaining operational efficiency.
Clear responsibilities. Commercial banks, as operating institutions, bear responsibility for customer wallet security, payment services, compliance, and the "three anti" responsibilities, extending regulatory reach from the central bank to frontline financial institutions.
Technological empowerment of regulation. Utilizing a "global unified ledger" data system, blockchain regulatory nodes, and artificial intelligence risk identification, real-time, trustworthy, and traceable transaction data is achieved, enhancing the precision and foresight of regulation.
Layered and classified management. Implementing reserve management for banking institutions and a 100% margin system for non-bank payment institutions ensures comprehensive risk coverage.
Thus, it can be seen that the digital renminbi is designed with embedded regulatory capabilities, achieving the goal of enhancing payment efficiency while not relaxing financial risk prevention.
5. Application Scenarios: From Retail Payments to Comprehensive Coverage of a Diverse Ecosystem
The application scenarios of digital cash are mainly limited to retail payments that replace physical cash. Although it has the potential for cross-border use, its capabilities are limited in complex scenarios such as wholesale finance, public services, and social governance.
Since its pilot launch, the digital renminbi has formed a comprehensive ecosystem covering G-end (government), B-end (enterprise), C-end (individual), and F-end (finance):
Retail and daily consumption, fully penetrating online and offline scenarios such as dining, cultural tourism, transportation, and shopping.
Public services and social governance, achieving efficient direct access for social security payments, medical payments, subsidy distribution, and tax collection.
Enterprise finance and supply chain, deeply applying scenarios such as corporate treasury management, supply chain financing, trade settlement, and green energy trading.
Cross-border finance, conducting cross-border trade settlement and investment financing facilitation services through the "Multilateral Central Bank Digital Currency Bridge," with the proportion of renminbi transactions within the bridge exceeding 95%.
In addition, the digital renminbi has also formed replicable promotion models in supporting rural revitalization, smart elderly care, and carbon inclusivity. This indicates that the digital renminbi is not simply positioned as a replacement for M0 (cash in circulation) but aims to become a comprehensive digital currency solution that serves the diverse needs of the real economy.
6. Responding to Challenges: From Passive Adaptation to Active Design
In its development process, the digital renminbi has proactively identified and responded to four common challenges faced by global digital currencies:
Addressing the challenge of payment tool innovation to monetary control. By incorporating the digital renminbi into the banking system and reserve management, it ensures that its circulation does not detach from the framework of financial macro-control, avoiding monetary substitution and financial volatility caused by private payment tools like stablecoins.
Mitigating the risk of financial disintermediation. By clearly defining the digital renminbi as a commercial bank deposit currency, it becomes part of the bank's liabilities, maintaining the credit creation function of the banking system and preventing the loss of bank deposits and contraction of the money multiplier due to large-scale use of digital cash.
Clarifying the responsibility relationship between the central bank and commercial banks. Through a "dual-layer operating system," the central bank is responsible for rules and infrastructure, while commercial banks are responsible for wallet services and compliance operations, establishing a cooperative mechanism with symmetrical rights and responsibilities and compatible incentives.
Integrating centralized management with distributed technology advantages. By adhering to an account-based foundation, compliance and regulatory effectiveness are ensured; in scenarios such as cross-border and multilateral collaboration, blockchain is prudently applied to achieve an organic combination of "centralized management" and "distributed trust," avoiding regulatory vacuums and sovereignty conflicts caused by purely "decentralized" approaches.
These proactive and systematic institutional designs enable the digital renminbi to robustly respond to internal and external challenges, reflecting its maturity and foresight as a national legal digital currency.
7. Moving Towards a "Powerful Currency" Digital Foundation
The digital renminbi has far surpassed the scope of "digital cash" in terms of design concepts, legal attributes, technical architecture, and application ecosystems. It is not a simple electronic substitute for cash but a legal digital currency that undergoes comprehensive upgrades within the framework of the modern credit monetary system, integrating account management, smart contracts, blockchain, and other digital technologies.
Its core characteristics include:
Essentially a deposit currency, belonging to the liabilities of the banking system and protected by deposit insurance;
Architecture is a hybrid model, centered on accounts and compatible with various technological routes;
Functionality is programmable and extensible, serving complex financial scenarios and macro-control;
Regulation is penetrative and collaborative, achieving a balance of safety, efficiency, and innovation;
Ecosystem is comprehensively covered, deeply integrating with the real economy and social governance.
As Deputy Governor Lu Lei stated, the digital renminbi is transitioning from "cash-type 1.0" to "deposit currency-type 2.0," which is an inevitable choice for China in the field of digital currency to "maintain integrity and innovate." It represents not only a technological iteration of the form of currency but also a systematic reshaping of the currency system, financial infrastructure, and even national financial competitiveness.
Deputy Governor Lu Lei emphasized that standing at a new starting point, the digital renminbi, based on the "dual-layer architecture," will always adhere to maintaining integrity and innovation, with the fundamental purpose of serving the real economy, effectively preventing risks, and scientifically and steadily promoting the transition of digital cash and electronic payments towards digital currency and digital payments, striving to inject technological and contemporary momentum into achieving a "powerful currency," and solidifying the modern monetary foundation for building a strong financial nation.
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