The piloting of the digital renminbi, which is now in full swing, has become the focus of public attention. Following the distribution of digital RMB red envelopes in Shenzhen in October, the central bank launched another pilot digital RMB program a few days ago, distributing 20 million yuan ($3.05 million) in digital "red envelopes" to eligible local residents in Suzhou, East China's Jiangsu province.

The digital RMB is aimed at filling some gaps in the market and not competing with the popular Alipay and WeChat modes of electronic payments.

The idea behind the introduction of the digital RMB is to replace cash. The scale of cash use in China is on the decline and the introduction of digital currency will expedite the emergence of a cashless society, rather than replacing the existing electronic retail payment market.

Compared with the existing means of paying electronically, the digital RMB embodies more advantages. It has sacrificed some convenience by paying more attention to security, not only of the funds but also personal information.

In the era of the digital economy, the ever-increasing public awareness about personal information security will strongly push market demands for the promotion of the digital RMB.

Under the current strictest "controllable anonymity" design, the transaction data generated by the digital RMB will only be used for the compliance review of anti-laundering and anti-terrorist financing by the central bank.

Although the central bank will be able to directly open personal accounts for the public, and people will be able to deposit their money with the central bank and get loans from it, which could result in "de-commercial banking", the launch of the digital RMB is not intended to lead to just a single bank, but rather to further strengthen the central bank's support for the existing financial system.

When it comes to the launch of the digital RMB, China has adopted a two-level release mechanism, which is to dispel the concerns of commercial banks and all sectors of society that the release of digital RMB will lead to financial disintermediation and the shrinkage of banks' balance sheets. Moreover, the biggest scenario for the future of the digital RMB is its possible use for cross-border payments.

21st Century Business Herald