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Mittwoch, 15.07.2020
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KEY POINTS

  • Analysts predict that China's Central Bank Digital Currency (CBDC) will be the first to launch in the world
  • China's speed in deploying projects at a national level should not be understated
  • When CBDC launches, China can incentivize partners to use it

China’s Central Bank Digital Currency (CBDC) could be the first such currency to launch internationally, bypassing the U.S. dollar.

Many transactions in China run through digital payment platforms such as AliPay or WeChat Pay. According to Ledger Vault Asia-Pacific head Glen Woo, these fintech companies were allowed by China’s government to course transactions because they are aligned with its objectives -- to centralize financial activity to a few platforms. These fintechs have allowed the yuan to reach far-flung areas in China.

Once the Central Bank Digital Currency is launched, control of domestic payments will return to the government. Woo told Cointelegraph that CBDC may be integrated into digital payment rails that already exists. And because these platforms have international reach, CBDC could have the potential to launch globally.

"I believe when it does come, it’s going to be one of the first, if not the first, real CBDC with a real use case globally," Woo said.

Woo also predicts the integration will be seamless without anyone noticing any difference. He argued that users would continue using WeChat Pay and “do a lot of different things” but they “wouldn’t notice and necessarily know what has changed in the backend.”

China piloted the CBDC program in key cities, including Shenzen, Chengdu, and Xiong’an, an upcoming metropolis outside Beijing that the government is developing to become a “smart city.” In this smart city, people will use digital money when paying for anything, such as bus rides and grocery shopping.

Yi Gang, governor of the People’s Bank of China (PBOC), earlier said that these pilot tests should not be confused with the CBDC’s official launch. The trial has nevertheless included pilot tests in businesses such as Starbucks and McDonalds. Woo said China’s speed in deploying projects nationally should not be understated, backing his statement that if China finally launched CBDC, the country will be the first one to do so.

Woo also noted that once CBDC launches, China could incentivize trading partners to use it, entrenching its use in the short term. Many countries heavily rely on Chinese imports so this is entirely possible.

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Autor(en)/Author(s): Vincent Mislos

Quelle/Source: International Business Times, 15.06.2020

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