The Study On The E-CNY Clause Of The Law Of People’s Bank Of China(Draft Of Revision)

On 23rd October,2020,People’s Bank of China published the draft of < Law of the People’s Republic of China on the People’s Bank of China> to public opinions,establishing e-CNY’s status of legal tender,which provides the legal basis for the full implementation of e-CNY.This article will lay out around the e-CNY clause—Article 19 of the draft,analyzing the rationality,scientificity and harmonization of legislation.Therefore,this article can be separated into three parts:Part one consists of Chapter II and III,arguing the rationality of legislation by introducing the macro background of digital currency as a world development trend and the advantages of e-CNY in circulation and regulation.Digital currency includes Crypto and Stable Coin which are launched by private sectors,and Central Bank Digital Currency(CBDC)which is launched by central banks.Fierce competition between the same and different digital currencies illustrates its broad prospects,and Digital currency is likely to develop into a new monetary system independent from the traditional dollardominated monetary system,which is the fundamental reason for developing e-CNY and establishing its legal tender status.And Chapter III will explain the necessity of legislation by comparing e-CNY with physical RMB and electronic payment instrument on circulation and regulation.Part two consists of Chapter IV,arguing the scientificity of legislation by speculating and analyzing the main impacts on the financial market after the draft is approved and adopted and e-CNY is fully implemented.The main impacts of e-CNY clause include three aspects: Firstly,as e-CNY is mainly a substitute for cash in circulation(M0),it may replace cash to some extent,but at present since the facilities for receiving e-CNY haven’t been laid out throughout the country,meaning e-CNY cannot be paid and received unconditionally,it will coexist with physical RMB.Therefore,the legislation is lack of operability.Secondly,as e-CNY is featured with Programmability,the wide use of ‘smart contract ‘in the future can facilitate business model innovation.However,THE DAO crisis(a smart contract launched by Ethereum)also alarms that safety issues must be taken seriously.Thirdly,the two-tier operation system of e-CNY is compatible with the current system of currency issuance and circulation,releasing the concern that commercial banks may be completely squeezed out,and on the contrary,it enables commercial banks to compete for more users with Third-party payment instrument.However,it may also mean the reduction of deposits due to increasing demand for e-CNY and the challenge to compete with Third-party payment instrument who have had advantage in technology and user base.Part three consists of Chapter V,raising opinions on the improvements of relevant supporting institutions in China in terms of harmonization of legislation.First,RMB administration involves not only < Law of People’s Bank of China>,<Regulation on the administration of RMB> <Law of the People’s Republic of China on Commercial Banks>are also important parts,while contents about e-CNY haven’t been updated in such regulation/law,yet.Second,prohibition on private-launched digital currencies does not mean that regulation in this area is not necessary as relevant activities haven’t been totally driven out and it is very likely that China may open part of private-launched digital currencies in the future.Therefore,systematic regulation in this area is necessary.Third,managed anonymity of e-CNY can guarantee financial safety and at the same time can satisfy the demand for privacy protection.However,people can really take this advantage only when their personal information is well protected even before public power,so it is important to ensure the full implementation of <Personal Information Protection Law> and other relevant regulations in the later period.