Many analysts seem to think that China’s central bank cryptocurrency will attract businesses away from payment giants such as AliPay and WeChat Pay. The concerns were shown by Cindy Wang, an analyst at DBS Group Research, while giving an interview to South China Morning Post.
China has been working at a faster pace on this digital Yuan project ever since Libra‘s whitepaper was released by Facebook as the Chinese government has already shown some strong feelings about Facebook’s crypto.
The Cryptocurrency initiative by the People’s Bank of China (PBoC) has gained much traction for the last whole week, and China’s answer to Facebook’s Libra cryptocurrency might actually live up to the hype, crypto community has created.
Wang said that the crypto might just become profitable for Beijing as digital currency can be a big hit in China’s already cashless society. In China, researches have shown that almost 9 out of every 10 transactions are done through AliPay or WeChat Pay.
She also said that the current problem of people taking out their money from the bank can also be solved as the cash outflow will get balanced and people might use their accounts directly for conversion to the digital coin. Wang told:
Currently, banks are under pressure to retain their deposit base because, with the money market funds distributed by third-party payment providers like Alipay or Tencent, some of the idle money held in mobile payment accounts are leaked out of the banking system into the hands of fund managers,
Officials of China’s central bank said that the bank has developed its own digital currency, running on blockchain and it might launch soon as BlockPublisher reported earlier.
The launch was announced by the deputy director for payments at PBoC. He said that the whole department had been hard at work for many years to create this currency and the move has been made to support the development of digital currency environment in China:
It can use existing resources to support and develop commercial banks and smoothly promote digital currency,”
Although the currency will run on a blockchain-based network it will not contain the specifications of a cryptocurrency. The currency will not be untraceable or anonymous and the government will have full control over it.
One of the key problems with the Chinese crypto would be the ability of the Chinese government to track each and every transaction to the source of origin, giving the government more power over people’s finances.
Chinese officials also came publicly forward against Libra. The former governor of PBoC has already said that Libra poses a great threat to the Chinese economy and Yuan. He also said that not just the Chinese economy will be affected but the global economy will be at risk due to this move and the government should stop this from happening. He stated:
Libra has introduced a concept that will impact the traditional cross-border business and payment system.