After China announced that it would develop its own digital currency to counter the release of Libra, some experts now believe that China’s answer, could potentially help the People’s Bank of China (PBoC), take business away from local giants as well.
According to Cindy Wang, an analyst at DBS Group Research, Beijing will most likely profit on more than one front from the appeal of its state-issued digital currency.
Wang states that two of the biggest payment giants in china – Alipay and WeChat Pay, basically account for 9 out of every 10 transactions done in China.
PBoC has a lot on its plate
At the moment, Chinese banks are under a lot of pressure to retain their deposit base with the money market funds distributed by 3rd-party payment providers like Tencent and Alipay, a large portion of the idle money that’s held in mobile payment accounts get leaked out of the entire banking system and fall into the hands of fund managers.
China’s answer to Libra is ready to go by all accounts. The deputy director of the PBoC Mu Changchun, stated that the newly developed payment method would not in any way seek to compete with the Chinese Yuan or undermine its value.
Changchun also stated that the PBoC recognized the possible threat from the release of Libra and wants to make sure that neither Libra nor the newly state-issued digital currency take any functions away from the Chinese yuan.
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