Shanghai Securities News: The positioning of digital RMB in the monetary hierarchy may shift from M0 to M1
Foresight News reported, citing Shanghai Securities News, that a series of policy signals indicate that the development of digital RMB has entered a critical transition period from pilot exploration to system improvement. Analysts believe that the current positioning of digital RMB as M0 (currency in circulation) has gradually revealed many limitations in practice, such as the non-interest-bearing feature leading to insufficient user willingness to hold, and the separation from the banking account system exacerbating usage difficulties. Therefore, shifting its positioning to M1 is seen as key to solving the above issues.
Liu Xiaochun, Deputy Director of Shanghai New Finance Research Institute and Deputy Director of China Financial Research Institute at Shanghai Jiao Tong University, stated that there are two envisioned paths to achieve this transformation: one is to directly promote the digitization of deposits, converting personal savings and corporate deposits into digital M1, thereby achieving seamless integration between bank accounts and digital wallets. The other is to introduce a new dedicated savings form, allowing funds to be transferred from existing deposit accounts to digital wallets, but still included as on-balance-sheet liabilities of commercial banks, with interest calculated at the demand deposit rate or a slightly lower rate.
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