In early 2025, Beijing time, discussions around the technical details and regulatory orientation of introducing smart contracts for digital renminbi have noticeably intensified in both policy circles and the market. With pilot programs advancing in multiple regions and the concept of "programmable currency" being repeatedly mentioned, the central bank's choice to embed smart contract capabilities within the traditional account system, rather than directly adopting decentralized on-chain contract models like Ethereum, has become a focal point of external attention. On one side are the central bank-led, controllable, and reversible smart contracts, while on the other is the decentralized world characterized by code autonomy and transparency. The intense collision of these two logics within the same generation of digital currency has also brought to the forefront the question of "who does the currency ultimately serve and who decides" after "code is written into money."

The Leap from QR Code Payments to Programmable Currency

If we compress the payment history of China over the past decade into a few key frames, it starts with the leap in mobile payments brought about by the popularization of QR codes, leading to the ongoing expansion of digital renminbi pilot programs. Behind this is the regulatory body's desire to find a new balance between efficiency and sovereignty. Starting around 2010, the proliferation of mobile internet and smartphones led to an explosion of QR code payments at the retail end, with commercial bank accounts being "hidden" behind technology platforms like WeChat Pay and Alipay, greatly enhancing the payment experience. However, the front-end touchpoints of currency circulation increasingly fell into the hands of these platforms. Since the People's Bank of China initiated research on legal digital currency and promoted multiple rounds of pilot programs, digital renminbi has been clearly positioned as a digital form of cash directly issued by the central bank, aimed at replacing M0, rather than another type of "platform wallet." This means it must functionally achieve "broad acceptance like cash," while its legal attributes are closer to a digital representation of central bank liabilities.

Compared to third-party payments like WeChat and Alipay, digital renminbi does not focus on traffic operation, scenario binding, or financial product distribution, but rather returns to the essence of currency: who issues it, who keeps the accounts, and who has the final say. In the existing structure, third-party payments still rely on commercial bank accounts as a funding pool, with platforms responsible for front-end experience and risk control rules. Digital renminbi attempts to position the central bank directly at the forefront of this structure, straightening out the chain of currency issuance, circulation, and retrieval. With the introduction of smart contracts, regulators hope to gain more refined control over currency and payments, such as automatically completing directed payments and usage restrictions between specific times, scenarios, and parties, achieving full-process programmability of "where the money comes from, where it goes, and under what conditions it can move." This capability does not simply mean smarter payments; it allows for macro-control, fiscal subsidies, anti-money laundering, and cross-border regulation to potentially be embedded in every currency transaction at a finer granularity through code and rules.

Account System Contracts: The Central Bank Writes "Code" into the Ledger

Under the current pilot path, digital renminbi chooses to implement smart contracts within the account system, rather than migrating to a public chain-style decentralized architecture. This decision means that the form of programmable currency is closer to a "rule-enhanced account" rather than "autonomous on-chain assets." According to public reports and industry analysis, the programmability of digital renminbi is first reflected in functions such as directed payments and automatic execution: certain funds can be pre-set for specific purposes and can only be spent at designated merchants or in specific scenarios; government subsidies and fiscal expenditures can be automatically allocated once triggering conditions are met, and cannot be diverted if conditions are not met; in trade settlement scenarios, the release of payment can be bound to changes in ownership, document verification, and other processes, with the contract automatically determining whether to release funds. The commonality of these functions is that they are all embedded in the ledger and system maintained by the central bank and operating institutions, with licensed institutions responsible for deployment and operation.

As one industry analyst stated, "The implementation of smart contracts in digital renminbi reflects the central bank's cautious attitude towards the programmability of currency." This caution is first reflected in the controllability and review mechanisms of the contracts. A viewpoint from a bank's technology leader emphasizes that "smart contracts under the account system are more in line with the existing financial regulatory framework," because all logic operates within the existing financial infrastructure, allowing regulators to use familiar authorization, reporting, risk control, and compliance review processes to conduct pre-approval, in-process monitoring, and post-event accountability of contract content and execution results. In this model, if there are system failures, contract design flaws, or violations such as money laundering or fraud, the central bank and banks can use technical means to suspend execution, roll back transactions, and freeze funds.

This stands in structural contrast to the design philosophy of on-chain contracts like Ethereum. On Ethereum, once a smart contract is deployed on-chain, it becomes public and transparent, difficult to change, with contract code executed across decentralized nodes, and results guaranteed by consensus mechanisms. Generally, "code is law," with contracts executing automatically and being almost impossible to unilaterally roll back. Openness means that any developer can deploy contracts without permission, while autonomy means that the authority of contract logic primarily derives from the code itself, rather than a single institution. In the digital renminbi model, openness is strictly confined to licensed institutions and compliant scenarios, transparency is more about being open to regulators rather than to society at large, and autonomy is replaced by the final discretion of the central bank and regulatory authorities, with contracts always subject to being paused, corrected, and held accountable.

The Collision of Decentralized Ideals with Central Bank Realities

From a more abstract perspective, the design philosophy differences between cryptocurrencies and central bank digital currencies are concentrated around three keywords: decentralization, sources of credibility, and sovereignty boundaries. Systems like Bitcoin and Ethereum pursue the construction of a trusted ledger in an untrustworthy environment, replacing the endorsement of a single institution with open-source code and distributed consensus, where credibility comes from mathematics and mechanism design, rather than a single country or central bank. The boundaries of currency are inherently cross-national, with nodes spread globally, allowing anyone who adheres to the protocol to participate in verification and use. In contrast, for central bank digital currencies, the starting point is sovereignty and compliance, with the goal of enhancing efficiency, strengthening monetary policy transmission, and ensuring financial stability within a regulatory framework. Credibility still derives from national credit, with contracts and code viewed as tools serving regulatory objectives, rather than "new rules" that transcend the system.

Under this premise, it is almost impossible for central banks to accept the strong sense of "immutability" and fully self-executing extreme programmability of the on-chain world. The reason is not just technical security, but also responsibility and accountability mechanisms: in the real world, contracts can be declared invalid by courts, halted by regulatory authorities, erroneous transactions can be reversed, and fraudulent activities can be pursued. If a piece of code is allowed to completely detach from regulatory control, when large-scale financial losses, systemic risks, or malicious exploitation of contracts occur, the question of who bears the final responsibility becomes an unsolvable dilemma. Therefore, the programmability of digital renminbi is designed to be programmable within the boundaries of regulation, meaning that all automatic executions must have traceable authorization and regulatory interfaces, and contract logic must align with laws, regulations, and financial regulatory rules, rather than shaping the rules themselves in reverse.

This design choice directly impacts code review, permission management, and users' subjective perceptions of privacy and sovereignty. In the on-chain world, contract code is audited by the community and open-source checks, with users primarily deciding based on "whether to trust the code and developers"; in the digital renminbi system, contracts are more likely to be written and reviewed by the central bank, commercial banks, or approved institutions, with the auditing process mainly occurring between regulators and institutions, and users only seeing a packaged functional entry. In terms of permission management, the rights to deploy, upgrade, pause, and roll back contracts are concentrated in the hands of a few institutions, which facilitates rapid risk handling but also means users must trust that this centralized power will not be abused. Regarding privacy and sovereignty perception, the anonymity or pseudonymity of on-chain assets gives users a sense of "keeping a distance from the sovereign currency system," while the account-based structure and high traceability of digital renminbi make some users more acutely aware that future currency may be more "transparent," with every condition in the contract quietly reshaping the power boundaries between individuals and the state, as well as between the market and regulation.

Global Central Banks' Path Choices: Not the Bitcoin Route

Looking globally, the exploration of central bank digital currency technology routes by major economies has clearly differentiated into several styles. Some countries choose to develop account-based digital currency forms based on existing payment and settlement systems, emphasizing compatibility with existing financial infrastructure and regulatory continuity; other countries and regions are experimenting with token-based, blockchain-based CBDCs on a small scale, hoping to leverage distributed ledger technology to enhance cross-border payment efficiency, reduce settlement costs, and even explore programmable payment cross-border collaboration. On this spectrum, Bitcoin and Ethereum represent the end of "completely decentralized, not dependent on central banks," while most central banks deliberately maintain distance from this path in practice, emphasizing that "technology can be referenced, but the goals and governance logic are completely different."

China's choice is to introduce programmable capabilities on an account-based architecture, forming a stark contrast with some countries exploring token-based and blockchain-based CBDCs. The token-based path is usually closer to "digital cash," emphasizing peer-to-peer circulation and weak account dependence, making it easier to integrate with cross-border scenarios; blockchain-based CBDCs, to some extent, rely on consortium chains or permissioned chains, attempting to form a distributed accounting structure among multiple nodes. In contrast, the Chinese solution firmly holds the core ledger within the central bank and operating institution system, enhancing payment and settlement logic with smart contracts, allowing it to adapt to existing regulations while also demonstrating the advantages of "code executing automatically" in specific scenarios. This design is more conservative in terms of openness and decentralization, yet takes the initiative in compliance, operational controllability, and deep coupling with the domestic financial system.

From a strategic perspective, the Chinese solution is backed by a series of clear trade-offs. First, in terms of controllability, unifying accounting and contract execution within a central bank-led account system helps ensure that capital projects are manageable, anti-money laundering and anti-terrorism financing requirements can be implemented, and sufficient "braking power" is retained in macro-financial stability and cross-border capital flow management. Second, in terms of compliance, adhering to the existing regulatory framework reduces institutional friction, allowing commercial banks and payment institutions to connect and innovate within familiar compliance tracks, avoiding large-scale restructuring of legal and regulatory systems. Third, in international competition, a mature, replicable, and connectable digital currency system is expected to export standards and discourse power in future cross-border payment cooperation and regional financial infrastructure construction. This route is not the Bitcoin path, but rather attempts to consolidate the international use and institutional influence of fiat currency in a different way in the digital age.

Future Scenarios and Games Enhanced by Smart Contracts

Once smart contracts are deeply integrated with digital renminbi, many scenarios in daily economic activities could be rewritten. The most intuitive examples are subsidy distribution and fiscal expenditure management. Within a controlled smart contract framework, subsidies can be precisely targeted to specific groups and purposes, such as being usable only for medical, educational, or specific regional consumption, and if not used within the agreed timeframe, will be automatically reclaimed; special fiscal funds can be bound to project progress, acceptance results, and invoice information through contracts, achieving the effect of "automatic disbursement upon condition fulfillment, and funds cannot be used if conditions are not met." On the regulatory side, smart contracts can embed rules for anti-money laundering, anti-terrorism financing, and tax compliance into payment processes, triggering more reviews for transactions above certain amounts or in sensitive areas, with cross-border capital flows being marked and layered for real-time regulation. For trade settlements, especially in scenarios with long supply chains and multiple participants, digital renminbi contracts can bind orders, logistics, warehouse receipts, and settlements under the same rule set, reducing manual operation steps and improving settlement efficiency.

This new architecture signifies a deep migration and restructuring of interests for commercial banks, technology platforms, and traditional third-party payments. On one hand, commercial banks have the opportunity to provide "contract as a service" at the digital renminbi contract level, customizing payment and settlement logic for enterprises and governments, thus expanding new intermediary business spaces. On the other hand, they must accept the reality of some payment and settlement powers being consolidated into the central bank's ledger, necessitating adaptations in their profit models and risk control systems. Technology platforms and third-party payments face a more complex game: if smart contract capabilities are primarily held by the central bank and licensed institutions, the "rule-making power" of platforms in the payment chain will be compressed, requiring them to seek space in scenario operations, data services, and financial technology output, while also achieving deep integration and collaboration with the digital renminbi system to avoid marginalization. For users, the payment experience may seem largely unchanged on the surface, but the underlying control logic, fund routing methods, and contract rule makers will undergo subtle shifts that are not easily perceptible.

For the broader ecosystem of crypto assets, this process will also not be silent. On one hand, the central bank-led compliant programmable currency may, to some extent, squeeze certain "gray area" payment demands, shrinking the usage space of assets that tout anonymity and ease of cross-border transfer; on the other hand, programmable currency will, at the level of public education, allow more people to intuitively understand for the first time that "code can determine how money is spent," thereby lowering the learning threshold and opening the door to the decentralized world for users willing to take on higher risks and stronger autonomy. When controllable and reversible smart contracts coexist with open and autonomous public chain contracts, the market will naturally segment in different scenarios: some scenarios will prioritize regulatory backing and legal certainty, while others will care more about censorship resistance and permissionless innovation. The interaction and collision of these two tracks will long shape the boundaries of the digital asset ecosystem.

China's Choice After Code is Written into Currency

Returning to the path that China is currently on, the introduction of smart contracts into the account-based architecture of digital renminbi essentially involves a detailed balance between efficiency, control, and innovation. On one hand, by writing payment logic and policy rules into code, it can significantly enhance the efficiency of fund allocation and settlement, reduce human intervention and operational costs, and provide a more refined toolbox for macro-control and micro-payments; on the other hand, the central bank and regulatory agencies deliberately retain the final discretion over contract execution, limiting the systemic risks brought by extreme programmability within a framework that allows for rollback, suspension, and accountability, firmly placing control within the sovereign currency system. In terms of innovation, digital renminbi has not chosen to fully adopt the traditional account system but has opened smart contract capabilities to financial institutions and certain scenarios, encouraging product and service iteration within visible regulatory boundaries. This "walled innovation" is another response to the "permissionless innovation" of the open crypto world.

It is foreseeable that central bank programmable currencies and open crypto systems will not simply be mutually exclusive; rather, they are likely to coexist, interact, and even learn from each other for a considerable period. The digital renminbi system may continue to observe the practices and lessons of the public chain world in terms of technology selection, privacy protection mechanisms, and cross-border collaboration models, while the public chain ecosystem, in its attempts at compliance, stable architecture design, and governance mechanism optimization, will also have to respond to the realities of regulation and sovereign currencies. The overlap of these two tracks in areas such as cross-border payments, asset tokenization, and smart contract standards will drive the market to repeatedly reassess their respective value propositions and risk boundaries.

Looking ahead to the rhythm of policy and technology implementation in the coming years, the digital renminbi and its smart contract capabilities are likely to expand from the pilot phase to broader scenarios within a not-so-distant time window. With the improvement of supporting laws and regulations, the systematic upgrades of commercial banks and technology platforms, and the gradual cultivation of user habits, market expectations for programmable currency will shift from abstract concepts to concrete pricing: which businesses will be reshaped, which assets will benefit or be pressured, and which countries will occupy more favorable positions in the new round of global currency competition. For China, standing at the crossroads of digital currency, how to maintain a dynamic balance between sovereign control and international openness will determine whether this system, after code is written into currency, becomes a "super infrastructure" in the internal circulation or can also participate in shaping the future global currency order on a larger scale.

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