Precious metals served as the first means of making payments and currencies followed later on. Many national and local rulers have sought to monopolize the right to issue their own currency，but their efforts were largely unsuccessful until they established a single standard for legal tender.  While ushering in the new digital age，the rise of private encrypted digital technology has once again raised the challenge of denationalizing currency issuance. As an effective response to private encrypted digital currencies，CBDC embodies the state's currency sovereignty in the age of the digital economy.

What is CBDC?

Around the world，there is growing interest in Central Bank Digital Currencies (CBDC)，but what exactly are they? What's the difference between them and other types of currencies? Before answering these questions，we need to examine digital currencies from the following four aspects: Who is the issuer – is it a central bank or commercial banks? Is the currency electronic or a physical unit of exchange? Is the currency issued to the general public or to specific institutions? And what is the transfer mechanism – is it centralized or decentralized?

The renminbi banknote is a physical currency issued by the People's Bank of China for use by the general public，but the reserves on deposits that commercial banks must leave at the central bank can be considered as an electronic form of currency issued by the central bank to designated institutions. Before central banks begin issuing retail digital currencies，the general public does not have direct access to any electronic currencies issued by a central bank. Deposits in accounts at commercial banks are in a sense a digital currency，however. They are not issued by the People's Bank of China but are electronic currencies issued by commercial banks and used by the general public. They also have a centralized transfer mechanism as they can be shifted from bank to bank. The use of CBDC in retail applications would be a breakthrough. For the first time，it would allow the general public to make the central bank the indebted party for the electronic currency. This would have a profound impact on the financial markets and the economy overall.