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China’s Central Bank Digital Currency Threatens Alipay and WeChat

  • Alex Dovbnya
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    China’s leading online payment platforms will face fierce competition from both the PBOC coin and Facebook’s Libra

China’s Central Bank Digital Currency Threatens Alipay and WeChat
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According to a recent article posted by South China Morning Post, The People's Bank of China, which is on the verge of launching its own digital coin, will allow the country’s commercial banks to act as fiat-to-crypto conversion agents.

In such a way, they will take the power back from the country’s omnipresent third-party payment apps, such as AliPay and WeChat.

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Bringing the money back to banks

PBOC depositors hope that the new digital currency will encourage retail depositors to ditch their mobile payment accounts. That would favor commercial banks that are suffering from the rising loan-deposit ratio (it has already surpassed 72.85 percent in 2019).

With banks’ loan-to-deposit ratio rising, if banks continue to lose their deposit base it will be difficult for them to keep up with their lending, so through the digital currency the PBOC hopes to divert some of the deposits back to the banking system - said DBS Group Research analyst Cindy Wang Wang.

According to professor Hui Kai-lung, commercial banks are also competing with third-party payment applications when it comes to capturing big data, which is valuable for analyzing customer’s online behavior.

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Libra shaking up China

The PBOC-backed digital currency has been allegedly in the making since 2014, but it decided to take swift actions after the launch of Facebook’s Libra cryptocurrency. China’s central bank earlier expressed its concerns about Libra, claiming that the coin could impinge on the country’s financial sovereignty.

On top of that, Libra itself also appeared to be a serious competitor to Alipay and WeChat.

However, unlike Libra, the PBOC coin will reportedly not rely on Blockchain, which hardly makes it a cryptocurrency.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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Ex-Congressman Says Fed Should Not Play With Own Cryptocurrency

  •  Denis Sinyavskiy
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    Former US Congressman Ron Paul shares his thoughts on the possible creation of Fed’s own cryptocurrency

Ex-Congressman Says Fed Should Not Play With Own Cryptocurrency
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Former US Congressman Ron Paul spoke on Fox Business and said that the Fed should not think about creating its own cryptocurrency.

Fed’s Crypto: To Be or Not To Be?

Rumors have been circulating for the past few months about the Fed possibly creating own cryptocurrency. It is expected that a digital coin would become a competitor to its counterparts on the market, and may even replace fiat money. President Patrick Harker, President of the Federal Reserve Bank of Philadelphia, commented on such rumors at a recent conference:

“It is inevitable. I think it is better for us to start getting our hands around it.”

However, there has not been no official follow-up by the Fed towards a crypto exchange. While proponents of this idea believe such innovation is necessary, it is expected that the exchange could stop the current delays involving US bank transfers.

What do the opponents think about the Fed's own cryptocurrency?

The idea of ​​creating the Fed's cryptocurrency has its opponents. This includes Ron Paul, who believes that the Fed is in a better position to stay away from digital coins and allow the private blockchain sector and payment platforms to resolve this discussion in real-time. What the Fed plans to do next is unclear, but the central bank may still enter the game.

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About the author

Starting with a simple interest in cryptocurrency, over the past two years, Denis has worked in a cryptocurrency fund and become an author with an analytical bias. His engineering degree helps with the analysis of the technical part of the cryptocurrency market. As a fan of cryptocurrency, Denis believes that the blockchain technology is the future.

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