connect digital wallets of different operators as well as connect e-CNY wallet with bank accounts, thus improving the interoperability of payment instruments.
3.2 Features of e-CNY design
The design of e-CNY takes account of the advantages of both physical RMB and electronic payment instruments. Therefore it shares both the features of physical RMB, such as settlement upon payment and anonymity, and the features of electronic payment instruments, which are less costly, highly portable, highly efficient and hard-to-counterfeit. The design of e-CNY mainly considers the following features:
3.2.1 Identifiable both as an account-based and a value-based system
E-CNY is an account-based, quasi-account-based and value-based hybrid payment instrument. It has a variable face value and its value transfer takes the form of cryptocurrency strings.
3.2.2 Non-interest accrual
The e-CNY is a substitute for M0. Thus, it is treated the same as the physical RMB under M0, which carries and pays no interest.
3.2.3 Low costs
Consistent with the management of physical RMB, the PBOC does not charge authorized operators for exchange and circulation services, and the operators do not charge individual clients for the exchange of e-CNY either.
3.2.4 Settlement upon payment
According to settlement finality, the e-CNY is loosely coupled with bank accounts, and thus payments through e-CNY wallets are settled upon payment.
3.2.5 Anonymity (managed anonymity)
E-CNY follows the principle of "anonymity for small value and traceable for high value," and attaches great importance to protecting personal information and privacy. It aims to meet the public demand for anonymous small value payment services based on the risk features and information processing logic of current electronic payment system. Meanwhile, it is necessary to guard against the misuse of e-CNY in illegal and criminal activities, such as tele-fraud, Internet gambling, money laundering, and tax evasion by making sure that transactions comply with AML/CFT requirements. The e-CNY system collects less transaction information than traditional electronic payment and does not provide information to third parties or other government agencies unless stipulated otherwise in laws and regulations. Internally, the PBOC sets up a firewall for e-CNY-related information, and strictly implements information security and privacy protocols, such as designating special personnel to manage information, separating e-CNY from other businesses, applying a tiered authorization system, putting in place checks and balances, and conducting internal audits. Any arbitrary information requests or use are prohibited.
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