In his latest essay, Wang Yongli, former vice president of China’s central bank PBOC, believes that the possible choices for the construction of a new digital currency system are as follows:

“The digital currency platform built by central bank, which is open to the whole society (open source). All social entities directly open the only “basic account” on the digital currency platform. This has become the most unified, basic and important reference account for the owners of digital currency. Each receipt and payment amount is registered one by one and the real-time balance of the account is maintained. However, the account balance is only for reference data and no interest is calculated.”

At the same time, social entities can open “business (special) accounts” in various financial institutions, such as commercial banks, to specially record the changes of creditor’s rights and debts caused by the opening of all kinds of financial businesses and their results, and calculate the interest according to the agreement. The business accounts of each social entity are linked with their basic accounts in the central bank.

Commercial banks and other monetary derivative institutions engaged in lending or bond investment will not only have capital exchanges with borrowers but also with the central bank. The digital currency accounts of commercial banks in the central bank will be relatively complex. Commercial banks need to open digital currency loan accounts and deposit accounts (deposit accounts can also be integrated with basic accounts) in the central bank, calculate interest separately according to the agreement, and also need to open a reference account for digital currency investment.

When issuing digital currency loans, commercial banks should not only adjust the records of “loans” and “deposits”, but also send digital currency loans and information to the central bank together with borrowers. The central bank should register the digital currency accounts of lending banks and borrowers for reference.

In this way, the central bank has formed a “digital currency account” of the whole society, forming the coexistence of the “basic account” of the Central Bank of digital currency and the “business account” of financial institutions.

The central bank can control the receipt and payment of all digital currencies and the specific distribution of digital currencies in real time. It can realize the all-round and whole-process monitoring of digital currencies.

However, the central bank does not handle specific business for units and individuals, It will not have a huge impact on the existing financial system; the financial businesses such as deposits and loans for units and individuals are still handled by financial institutions such as commercial banks, but financial institutions can only understand the information related to their own business, and cannot understand the specific situation of business counterparties, so as to realize limited anonymity outside the central bank and moderately protect business secrets and personal privacy.

At present, many countries attach great importance to and actively explore the CBDC. Among them, the digital currency DCEP designed by China’s Central Bank has entered the testing stage. The people’s Bank of China stated that DCEP would mainly replace M0 and adopt the existing “two-layer operation system of central bank-commercial bank-social subject”, but did not disclose the specific operation details. In fact, the digital currency may only start from replacing M0, which should not be limited to this, but should replace all currencies as much as possible to achieve profound changes in the monetary operation system. If DCEP is only limited to replace M0, its market competitiveness or the actual effect of input and output may be greatly reduced.