China has become a global pioneer in the development of the digital currencies of the central bank, i.e.CBDC, thus creating speculation around its ambitions in this regard. Glenn Woo, head of Ledger Vault in the Asia-Pacific region, announced that China’s virtual currency will be the first in the world to be launched.
Woo emphasized the speed at which the Chinese government can implement major innovations nationally. He suggested that an early CBDC pilot program involving 19 companies such as McDonalds or Starbucks could be gaining momentum very quickly.
“I believe that when this happens, it will be one of the first, if not the first, CBDC project that will have real global application.”
“Nobody will even feel the difference”
Many analysts say that China is trying to regain control over domestic payments through the use of CBDC. It is estimated that currently over 96% of small retail transactions are processed by AliPay or WeChat Pay applications.
Woo, however, provides a more detailed explanation. He believes that the development of digital payment platforms was allowed by the Chinese government and in line with the system’s goals – to centralize most of the country’s financial activities on several financial platforms, including in rural areas that were previously outside government control.
Woo predicts that CBDC will be integrated with existing digital payment systems, causing only minor disturbances in the Chinese economy. At the same time, it will allow the government to control the country’s retail economy even more.
“From a retail user perspective, you won’t even notice what has changed. It will still be the same. The government will continue to use WeChat, a great app for doing many different things – shopping, ordering taxis, transferring money and so on. It will be an imperceptible process. Nobody will even feel the difference. “
– Woo said.
China will use CBDC to bypass the use of the dollar in international trade
Woo assumes that China will use CBDC as a means of conducting trade settlements in Chinese currency on a global scale.
He believes that China will try to encourage its trading partners to enter into transactions using CBDC. The government will also seek to increase the use of CBDC in international trade – especially with countries dependent on Chinese imports.
However, Woo doubts that such a strategy will be successful in the short term, given the increasing global protectionism during the economic recession.