Important additional details have emerged about China’s central bank digital currency, also known as the “digital renminbi.”

According to report Issued by the financial services company Huatai Securities, the currency will as expected will be fully centralized.

The report contained the following:

Unlike digital currencies under a decentralized system like Bitcoin, Chinese digital currency adopts a centralized management system.

Although the official issuance of the digital currency has not been announced, these specific details have already appeared.

How will the Chinese digital currency work?

The currency will be controlled by China’s central bank but issued through a select group of commercial banks.

Read:Charlie Shrem Joins EFFECT.AI as Project Consultant

There are six parts of the new digital currency system which are:

Issuance, trading, management, withdrawal, investment and financing, and interbank settlement.

Essentially, the central bank will be the command center where the digital currency and authorized transactions are created.

Commercial banks will submit requests on behalf of their customers to issue new currency and conduct transactions.

While this two-tier model is similar to how central banks issue bank money like the US dollar, the difference is that once the money is released, the government will be able to control the conduct of transactions.

This gives the government much more control than would be the case with paper money.

It is expected that this system can help reduce the ongoing banking problems in China, but it is likely that it will also be used to control citizens, through the social credit system.

How will the digital currency be kept secure?

China’s digital currency is very much focused on the security aspect.

It will use basic cryptography to ensure that transactions are properly processed similar to Bitcoin and other cryptocurrencies, which use cryptography to secure transactions.

Read:US Politicians Call for Limiting China’s CBDC Use in US App Stores

However, China is thinking more holistically.

The information about cryptocurrency transactions will not be transmitted in plain text but will be encrypted.

The digital currency is also designed to be resistant to attacks.

For example it is designed to defend against repetitive transactions and will use authentication technology to ensure that the currency is exchanged by only the person who owns it.

Thanks to its centralized system, China has made it possible to conduct off-line transactions.

This means that people can spend the digital currency when they do not have access to the internet which makes the transaction much easier.

There will be three centers responsible for managing the data associated with the digital currency.

One center will manage the use of the currency, another will examine the registration of each individual wishing to use the currency, and the third will analyze the financial data generated by the system.

Read:European Parliament votes to ban anonymous crypto transactions…details here

There will be some privacy too.

While the central bank will be able to see all the transactions and who made them, other companies will not be able to see this data to encrypt it.

They may be able to access transaction information but will not necessarily be able to match the transaction to a specific individual.

The report states that digital currency wallets will use authentication methods, such as tokens and biometric codes such as fingerprints and passwords.

Read also:

What is the effect of the Chinese New Year holiday on the price of Bitcoin?

The Chinese Central Bank announces the completion of the major stage of its digital currency