The Institutional Dilemma And Legislative Improvement Of Central Bank Digital Currency Issue In China

The further development of digital technology and digital economy puts forward higher requirements to the existing payment infrastructure.In such context,digital currency has emerged and become the trend of future currency form development with its characteristics,bringing substantial challenges to national monetary sovereignty and financial supervision.Central banks of various countires began to conduct research on digital currency and even considered combining legal tender with digital technology to issue legal digital currency.China decides to issue the retail central bank digital currency(e-CNY)with a centralized,two-tier structure model,and selects some operating agencies to participate in the issuance and operation of e-CNY.Up to now,e-CNY has entered the pilot program and the scope of the pilot has been gradually expanded.However,retail digital currency cannot be included within the scope of RMB under the existing legal framework,resulting the issuance of e-CNY faces the practical problem without sufficient legal basis.Moreover,the legal status of e-CNY has not been legally confirmed,which leads to the uncertainty about its legal attribute and relationship with the existing currency.It is crucial for digital currency that whether it can obtain the legal tender status,which directly determines the strength and intensity of legal protection.Furthermore,the existing currency system is constructed according to the characteristics of physical currency,such as unlimited legal tender system and currency supervision rules,etc.,but central bank digital currency cannot apply the rules directly because of its digital nature.On the one hand,the legal tender system has been challenged because of the technical impact of private payment and the deviation of law enforcement position.Based on its digital form,digital currency relies on carriers and payment facilities to complete its transfer.Adhering to the unlimited legal tender effect does not meet the needs of the times and the need of payment.So a limited scope of legal tender may be more appropriate.On the other hand,e-CNY will be issued,stored and circulated in the encrypted digital strings,there is no pattern-design,printing,transportation,defacement,etc.,and almost no possibility of counterfeiting.And the issuance standards and regulatory rules for e-CNY are determined in the context of the technical design and policy positioning.For the institutional dilemma faced by issuance practice,we should return to the basic perspective of legal relationship,and provide ideas for legislative improvement by sorting out the monetary power(or rights)and obligations.Combined with the pilot experience,it is clear that the improvement of legislation requires not only the improvement of existing currency laws and regulations,but also the formulation of special issuance and supervision rules to unify the issuance standards for the issuance process of e-CNY and determine regulatory rules.