When it comes to the global CBDC race, China has emerged as the clear leader. China’s e-CNY is expected to be fully operational by February 2022. However, in its advanced pilot stage, it has already conducted several large-scale trials.
Earlier reports suggested that the PBoC may establish a digital exchange in Beijing. Now that private crypto is out of the way, the plan is to promote its digital yuan even more.
Meanwhile, ahead of the Winter Olympics in February, the Chinese government may strike a deal with private payment platforms for market share.
Eswar Prasad of Cornell University also commented on the People’s Bank of China’s motivation for establishing a CBDC in a recent interview. He stated,
“The People’s Bank of China wants to ensure that a digital version of the yuan is relevant in terms of keeping central bank money tractable at the retail level.” Also, to ensure that two payment providers do not dominate the payment space.”
E-CNY is not available on Alibaba’s platforms. It is also worth noting that Alibaba is a massive platform that attracted close to $85 billion in sales in just 11 days. When a comparable volume of digital yuan was reached in 18 months. Prasad went on to say,
“The PBOC is attempting to create a digital currency that competes with these payment providers; however, I believe the use case for a CBDC is actually quite weak in China.”
“I believe there is concern that these two major payment providers, which have dominated the payment space…now control massive flows of data.”
As a result, Prasad explained that the goal of establishing a CBDC should not be to directly compete with these payment providers in the future. Instead, the goal is to “provide a payment infrastructure that then provides interoperability for any payment provider who wants to use that payment network.”
According to the professor, this creates a level playing field for new payment providers.
In a similar vein, Indonesia’s central bank recently announced plans to launch a digital currency to ‘fight’ private cryptocurrencies.