Several major Chinese banks are promoting the use of digital yuan over local payment firms like Alipay and WeChat Pay ahead of the upcoming shopping festival in China.
Chinese Banks Support Digital Yuan
Reuters reports that six of China’s largest banks are behind the promotion of the digital yuan in Shanghai, advocating that the central bank-based digital currency can be used during the online shopping festival slated for May 5.
China’s May Day festival is the country’s third annual national online shopping festival. It’s expected to kick off on Wednesday, featuring an array of products and services from numerous sectors within the country and from Silk Road e-commerce partner countries.
To use the digital yuan for online shopping, retail outlets and consumers have been urged by the banks to download digital wallets to effect purchases through the CBDC.
Meanwhile, the introduction of the digital yuan by banks is regarded as a drift away from the traditional payment methods shoppers are fond of, including Ant Group’s Alipay and Tencent’s WeChat Pay.
Furthermore, the report claims that the digital yuan payment offers a more convenient and seamless payment system compared to Alipay or WeChat.
The Head of the People’s Bank of China’s (PBoC) research institute, Mu Changchun, earlier stated in South China Morning Post that 98 percent of Alipay and WeChat Pay accounts are largely responsible for the risks affecting the domestic financial system.
Changchun clarified that the central bank has no intention of competing with Alipay and WeChat Pay, but will only provide backup to ensure that there is financial stability in the country.
More than any other time, the Chinese government has intensified efforts against anti-competitive behavior in the internet sector.
Earlier this year, Beijing imposed a $2.8 billion fine on Alibaba for engaging in monopolistic practices.
Instructively, the six banks pushing the adoption of the digital yuan are Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, HSBC, and China Construction Bank.
The State of China’s Digital Yuan
As China advances in its quest for state-backed digital currency, experts are looking at the possible limits that the digital yuan could impose on some sectors because it is a centrally controlled digital currency.
According to Reuters, it was reported that China’s digital yuan could hit a deadly blow for Macau Casino junkets.
Given the fact that Macau’s gambling business attracts people from far and near, experts believe that the gambling industry could be adversely affected because the digital yuan is projected to clamp down on illegal money flows.
Meanwhile, a top China’s central bank official, Sun Guofeng, discloses that the upcoming Winter Olympics may be the first test of the digital yuan by foreigners.