The rapid growth of China’s CBDC is continuing, with PBoC and Alibaba’s affiliate – Ant Group – announcing a joint venture to create an electronic currency (e-CNY).
The People’s Bank of China and Ant Group, an associate of Alibaba Group, has teamed up to build a portal that will fund the central bank’s digital currency. According to the Global Times, PBoC has been designing the e-CNY with Ant and Tencent for three years.
The Transition to e-CNY
The Chinese central bank and Alibaba’s affiliate Ant Group signed an agreement on May 3rd, according to VOA News, to create a digital yuan through joint efforts. The development will be built on Ant’s Group forum and “jointly promoted.”
According to the article, the PBoC has collaborated with Ant and Tencent on the digital yuan in the past three years. Despite some tensions between Alibaba’s affiliate and Tencent, the Chinese government’s international technology corporation, both companies have stayed loyal to the CBDC‘s system and distribution networks.
However, Francis Lun, the CEO of Geo Securities, expressed concern about a partnership between one of the country’s largest payment providers, Ant Group, and the political situation in China:
”The Chinese authorities are telling Ant that you should hand over your big data to the central bank. The data won’t remain in private hands until the Communist Party is the boss.”
In exchange, Ant asked to be in charge of the project and refuted the notion that “too much government action would pull the industry down.”
The One-of-a-Kind e-Yuan Officials from China’s Central Bank announced that their CBDC would be exclusive. According to the VOA paper, the e-yuan will be a “tool for government surveillance,” according to the VOA paper.
In turn, Francis Lun said that the CBDC would enable the government to monitor and regulate any user’s transaction “like a big brother.” He expressed high expectations that, as the digital yuan expands across the world, China will gain a significant edge and, at some stage, overtake the US in terms of economic superiority.
Lun concluded that PBoC views the relationship as a win-win situation for both parties involved:
”By collaborating with the central bank [to launch the e-CNY], these fintech giants will be revealed from pressure in the regulator’s anti-monopoly probe.”
Despite popular belief that the digital yuan’s target is to hasten the depreciation of the US dollar, Anne Stevenson-Yang, research director of J Capital Research, disagrees:
”I think there’s too much focus being placed on the idea that this is a totally distinct currency and they are in competition.”