China’s DCEP to Benefit Public, Influence Monetary Policy
China’s Digital Currency Electronic Payment (DC/EP) will benefit the general public, the director of the Center for Blockchain Finance and Law from the China University of Political Science and Law has said. Professor Hu Jiye said on Monday that the DC/EP would spur greater financial inclusion and allow the unbanked to access the financial system which “may be useful for ordinary people” and benefit ordinary lives even as it stabilises China’s financial system.
“Our monetary policies have four main objectives. One is to keep currency value stable, another is economic development, the third is employment, and the fourth to keep the financial system stable,” the academic said to CGTN. “I think digital currency will influence the four targets of monetary policy and make our financial system more stable, more healthy.”
The Chinese Commerce Ministry last week announced that it would be expanding the pilot programme for the DC/EP project to the Guangdong-Hong Kong-Macao Greater Bay Area, Beijing-Tianjin-Hebei and Yangtze River Delta regions. It is part of China’s move to become the first major economy to carry out a real-world test of an official digital currency after few years of exploring the idea.
Asia is the world’s largest digital payments market – with China comprising almost half of the worldwide transaction value – as well as home to half of the world’s top ten crypto exchanges when measured by traffic, liquidity and trading volume, according to the latest paper by DBS. It adds that China is still ahead of other nations in mobile payment with 81.4% of smartphone users having accessed payment apps in 2019 and 80% of Bitcoin mining operations even as it expects Asia to remain as the world’s most important digital payments market with a projected digital payment to grow by 16% through the first half of this decade.
While the DC/EP’s objective may be setting to push outside China’s jurisdiction, Japan has been pushing forward a broader initiative to lessen its dependence on China for manufacturing and to reduce future risks of supply chain disruption should another pandemic break out.
As a major trading partner with the ASEAN bloc – traded US$214 bln in 2019 – after China (including Hong Kong) and the United States (US), Japan is promoting the digitalization of trade procedures as a consortium of 20 of the country’s largest companies introduce a blockchain-based platform to manage and integrate trade transaction information.
The test run of the new system, which aims to unify record standards across the board, reduce costs and the time required to process import and export procedures, will start this year’s fall with Vietnam, as ASEAN chair for 2020, then extended to the other nine ASEAN countries. Japanese companies taking part in the project include Mitsubishi Corp., Mitsui & Co., Nippon Express, and Mizuho Bank.
According to The State of Southeast Asia: 2020 Survey Report which was officially launched in January by the Singapore-based ISEAS-Yusof Ishak Institute, confidence in China is not at all the best in ASEAN countries. Japan is the most trusted major power with 61.2% of respondents expressing confidence in Japan to do the right thing for public good. The European Union followed with 38.7%; the US (30.3%); and China with 16.1%.