{"id":57334,"date":"2023-09-05T21:26:55","date_gmt":"2023-09-06T01:26:55","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/cbdc-will-revolutionize-chinese-retail-payments\/"},"modified":"2023-09-05T21:26:59","modified_gmt":"2023-09-06T01:26:59","slug":"cbdc-will-revolutionize-chinese-retail-payments","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=57334","title":{"rendered":"CBDC Will \u2018Revolutionize Chinese Retail Payments\u2019"},"content":{"rendered":"
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A Chinese central bank chief has claimed the digital yuan will revolutionize the way the nation makes retail payments, and suggested the CBDC could one day \u201ccompletely replace\u201d cash.<\/p>\n

Per Yicai, Mu Changchun, Head of the Digital Currency Research Institute at the People\u2019s Bank of China (PBoC), made the comments at the China International Financial Annual Forum this week.<\/p>\n

Mu said it would be important to ensure that the digital yuan was accepted \u201cin all retail payment scenarios\u201d in Mainland China.<\/p>\n

He also called on the PBoC\u2019s banking and e-pay provider partners to streamline their QR code technical protocols.<\/p>\n

At present, wallets are hosted by the PBoC or a number of mainly state-run banks.<\/p>\n

The private-sector e-pay powerhouses WeChat Pay and Alipay have also added e-CNY functionality to their apps.<\/p>\n

But all of these partners have thus far sought to integrate e-CNY payment options with their own conventional pay interfaces \u2013 rather than with one another\u2019s offerings.<\/p>\n

This fact, Mu suggested, means that merchants can face IT-related adoption issues with their POS devices.<\/p>\n

The South China Morning Post quoted Andrew Fei, a partner at the Hong Kong law firm King & Wood Mallesons, as explaining:<\/p>\n

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\u201cA single, unified, and standardized QR code that supports e-CNY payments as well as Alipay, WeChat Pay, and existing electronic payment methods can incentivize more widespread use of e-CNY by making it more convenient for consumers to use, and for merchants to accept, e-CNY in the retail context.\u201d<\/p>\n<\/blockquote>\n

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China\u2019s Digital Yuan: New Adoption Drive?<\/h2>\n

Mu added that banking and e-pay partners also needed to perform a series of upgrades to help drive further CBDC adoption efforts in the retail payments sector.<\/p>\n

But analysts have claimed that Mu\u2019s comments were actually aimed at retailers, not partner financial institutions.<\/p>\n

Jie Hu, a Professor at the Shanghai Jiao Tong University\u2019s Advanced Institute of Finance, opined:<\/p>\n

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\u201c[Mu] is saying that all merchants should get ready, both in terms of their willingness and their tools, so that if customers want to pay with e-CNY, they must accept it.\u201d
\u00a0<\/p>\n<\/blockquote>\n

Toward a \u2018Cashless Society?\u2019<\/h2>\n

But Mu\u2019s wider goal is likely a radical reduction in China\u2019s dependence on cash, or even a total elimination of analog forms of currency.<\/p>\n

He said:<\/p>\n

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\u201cIn the future, commercial electronic payment tools may fully meet the needs of the digital economy and society and completely replace cash.\u201d<\/p>\n<\/blockquote>\n

The \u201cdigital economy\u201d has become a buzzword in Chinese political circles in recent years, and the PBoC is determined to lead the world in CBDC and \u201ccashless society\u201d drives.<\/p>\n

Other Asian nations, such as nearby South Korea, have also launched IT-powered \u201ccashless society\u201d drives of their own.<\/p>\n

The state-run media outlet Xinhua last month published an interview with Kent Matthews, a Professor of Banking and Finance at the UK\u2019s Cardiff University.<\/p>\n

In the interview, Matthews stated that the proportion of cash in terms of the total amount of yuan in circulation had \u201cdropped to 3.7%\u201d and \u201cis continuing to fall.\u201d<\/p>\n

Matthews said that China was \u201con track to becoming the world\u2019s top country for cash-free transactions,\u201d although he claimed it would \u201cbe impossible for any government to legislate cash away.\u201d<\/p>\n

The academic noted:<\/p>\n

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\u201cPeople are using cash much less today than they were 10 or 20 years ago. The trend toward a cashless society is inexorable.\u201d<\/p>\n<\/blockquote>\n

Mu further claimed that existing inter-bank payment and clearing systems can still \u201cmeet the needs of China\u2019s economic development.\u201d<\/p>\n

He said that there was \u201cno need to replace\u201d existing networks with the central bank\u2019s digital currency system.<\/p>\n

The PBoC chief claimed that conventional and CBDC networks \u201ccan be fully interoperable and seamlessly connected.\u201d<\/p>\n

Mu concluded that CBDC smart contracts could be used to boost the efficiency of Chinese wholesale payments.<\/p>\n<\/p><\/div>\n