At present, the digital RMB in China is advancing steadily. The pilot area has been expanded from "1+1" to 23 areas in 15 provinces and cities. The cumulative number of digital RMB transactions is about 264 million, amounting to about 83 billion yuan, and the number of merchant stores has reached 4.567 million. In addition, the European Union and the European Central Bank actively support the digital euro, while India promises to introduce the digital rupee.

at a time when digital currency, the central bank of various countries, is in the ascendant, Algorand public chain, founded by Professor Silvio Micali, a Turing Prize winner and a pioneer in cryptography, as the blockchain infrastructure selected by Marshall Islands in 22 to issue the world's first central bank digital legal tender, continues to show the elegance of enabling "FutureFi finance" in the field of central bank digital currency (CBDC).

The Algorand research team released the annual report "Issuing Central Bank Digital Currency Using digital currency" on July 12th, and made a continuous study on the CBDC progress of central banks around the world over the past year, and put forward a CBDC hybrid model based on the example of public blockchain in a two-tier retail system.

in this mode, the central bank has complete control over CBDC, and licensed service providers (LSP) such as commercial banks, remittance service providers and other financial technology companies can promote distribution and transactions. Compared with the traditional system, retail CBDC based on blockchain also promotes wider financial inclusion, especially for those who may find it difficult to open traditional bank accounts in the informal economy. Generally speaking, compared with the traditional centralized digital currency, the proposed design is expected to help the central bank realize the scale operation of CBDC more simply and economically.

The Algorand research team released the research report on CBDC for the first time in 221. This report added a section focusing on the benefits of CBDC and the primary role of the central bank in the wider digital age. The report defines four key trends in the digital age, including the growing digital economy, asset tokenization as a new business model, the growing demand for alternative currency forms, and decentralized finance as a new financial system. These trends directly challenge a key task of the central bank: to ensure price stability. Use cases of public blockchain, such as the model proposed in this report, will help the central bank to continue to perform its duties in the digital age.

The report was written by several outstanding economists and researchers. Among them, Dr. Andrea Civelli graduated from Princeton University, focusing on monetary policy transmission and inflation modeling. Currently, she is an associate professor of economics and a senior economist in Algorand, Wharton School of Business, University of Arkansas.

Dr. Co-Pierre Georg, associate professor at Cape Town University, South Africa, chairman of the Financial Stability Research Group of the Reserve Bank of South Africa (the central bank of South Africa), and member of the Economic Advisory Committee of the Algorand Foundation, received his Ph.D. from the University of Jena, Germany, and visited MIT, Princeton University, Oxford University and Columbia University successively.

Pietro Grassano, director of business solutions in Europe of Algorand, has worked in J.P Morgan for more than 15 years, and has held leading positions in its branches in France, Italy, Greece and other European countries. Earlier, he worked in BNP Paribas Asset Management Company and Andersen Consulting Company. Naveed Ihsanullah, director of engineering research in Algorand, focuses on distributed systems and has more than 2 years of experience in the field of next-generation application security software.

in addition to the introduction and conclusion, the main contents of the other six parts of the report are as follows: 1. the benefits of digital currency, the central bank: emphasizing the four main trends in the digital age, which challenges the central bank and inspires it to issue CBDC. 2. Designing an efficient CBDC: Based on the experience of various CBDC projects, the principles of designing an efficient central bank digital currency are summarized. 3. Economic considerations of issuing CBDC: Discuss the economic impact of issuing CBDC, from balance sheet and financial stability to the effect of monetary policy. 4. Algorand protocol: an overview of Algorand protocol, including design principles and a high-level overview of the protocol itself. 5. Using Algorand to issue retail CBDC：Algorand's method of issuing retail CBDC includes relevant design considerations and a detailed introduction of Algorand network support use cases. 6. Using Algorand to issue wholesale CBDC: the design method and related use cases of Algorand's wholesale CBDC.

consultant Algorand emphasized that CBDC is the lifeline of commercial banks

After the appearance of CBDC, there are still some differences from an international perspective. Commercial banks in some countries even regard the digital legal tender that the central bank may issue as an existential threat.

Dr. Co-Pierre Georg, one of the main authors of the research report "Using Algoland to Issue the Central Bank digital currency", an associate professor at Cape Town University and an economic consultant of Algoland Foundation, said in a recent interview with the media: "Commercial banks really should not regard digital fiat as a threat" and "digital currency, the central bank, is providing a lifeline for commercial banks."

Georg, who is currently the chairman of the Financial Stability Research Group of the Reserve Bank of South Africa, believes that "commercial banks have indeed regressed, and they will be afraid of technology giants."

Just as the central bank has regarded the stable currency linked to legal tender based on the blockchain as a potential threat to regulate the economy, commercial banks have also realized that if Libra of Facebook survives, "as we know, it will be the end of the banking industry," Georg said. "It will be an entity without financial supervision, with 2.3 billion customers and more cash than the market value of JPMorgan Chase Bank. Including American banks, how to compete with it? They can't do it. "

Georg believes that the problem is that commercial banks operate in walled gardens. "They make products, but they don't make infrastructure," he said. "Commercial banks should thank the central bank for providing a lifeline in public infrastructure. They can all gather together and compete. What's important is that they can compete with technology companies."

"When you talk to many participants in the market, they see CBDC as a product that can be sold to the central bank," Georg said. "This is not the right approach. If you build a product, you will only have Facebook in the end, and if you build infrastructure, you will eventually have the Internet. "

this means that you can enjoy information in much the same way as the early Internet developers. Georg claims that it took about 3 years for the Internet field to formulate the standard of interactivity. At the same time, he also believes that CBDC has the need for interoperability from the beginning, and there are too many things that can be done.

Georg suggested that CBDC in some countries can have more than one account book and one agreement, which is not necessarily divided into inter-bank wholesale CBDC and consumer-oriented retail CBDC.

"You can have a retail ledger with higher participation cost, but it provides you with smart contracts; You can also have a retail ledger without smart contracts but with very high transactions per second, "Georg said." As a central bank, you can operate both at the same time. "

As for the blockchain, Georg said that an unnecessary struggle is that some people in the banking sector regard CBDC based on blockchain as a competitor of the real-time settlement system.

"The existing payment system works well," he said, and it is cheap and reliable. "As far as I know, it has never failed." However, the real-time settlement system does not "promote some new innovations we see from private encrypted assets that need decentralized ledgers", such as the tokenization of physical or digital assets. In view of the amazing growth of cryptocurrency, there is obviously potential in this field.

"If you can introduce it into public infrastructure, assuming it is well regulated and maintained by trusted institutions, then this new infrastructure can support the new business model at the core of the digital economy. I think this is why the blockchain came in, "he said." You need a distributed account book to ensure that no one in this system can copy data. The secret superpower of the blockchain is that it makes the data unique. "

in terms of potential, he pointed out that "the last iteration of the payment system appeared in the 196s and 197s, when digital payment was introduced." Because of the support of technology, "blockchain can indeed promote new business models."

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