PBoC’s One Worry Ahead of Digital Yuan Launch
China is years ahead of other countries regarding the digitization of payment though it may still be grappling with one big worry regarding its digital yuan launch, a FinTech expert has told China’s broadcast channel, CGTN.
Richard Turrin, who is also the author of the books Cashless: China’s Digital Currency Revolution and Innovation Lab Excellence, said in the interview that China is now moving from first generation digital payment to the next generation which it has been working on for some seven years
“China is already far beyond most of the world with digital mobile payment through using the payment platforms, WechatPay and Alipay,” he said. “And now, it’s leaping ahead with the central bank digital currency (CBDC) and it’s actually inspiring other countries to actually build their own central bank digital currencies.”
He said while other countries may now be or considering building their CBDCs, they’ll be far behind China owing to the fact that the Asian country started its CBDC project earlier and it has years of experience in digitizing payment.
The edge has enabled China to achieve breakthrough in FinTech particularly in terms of succeeding with embedded finance – the ability to move money when it is wanted – and inclusive finance – not leaving anyone out including people who live in the most remote parts but made a part of the financial sector through digital technology.
Major Chinese banks which were initially rather resistant have been shaken to be more active as well. They have had to adapt and change along the line as their services have been disrupted by the two main digital payment platforms and now the pending digital yuan launch.
However, while the People’s Bank of China (PBoC) has been researching how to develop the digital yuan for seven years and already been testing it for six to eight months, Turrin says the apex bank still grapples with a big worry regarding the launch of the digital currency.
“The real issue is: who do you leave behind? If you go digital, do you leave behind the elderly? Do you leave behind poor people who may not be able to buy smartphones or a device? So, the real question is financial inclusion and how do you make not just the digital currency but how do you design – and this is what the PBoC has been good at. The PBoC has designed special smart cards that are small and they have a thumbprint reader and they are designed for people who don’t have a smartphone to be able to use access to the digital currency. So going forward, and going into the future is a wonderful thing but you have to make sure you don’t leave people behind and that takes a lot of thoughtfulness and a lot of time.”
The failure of the digital yuan experiment might weaken investors’ interest in China’s economy and dent the country’s reputation as an economic, financial and technological superpower, a Russian International Affairs Council article says in its analysis of the main reasons for the current ban on cryptocurrency mining in China.