People’s Bank of China and Alibaba Group’s affiliate Ant Group have joined forces to create a platform supporting the central bank digital currency. According to Global Times, PBoC has been working together with Ant and Tencent for the last three years on developing the e-CNY.
A Move Towards e-CNY
VOA News announced on May 3rd that the Chinese central bank and Alibaba’s associate Ant Group have signed a deal on developing a digital yuan with mutual efforts. The move will be ”jointly promoted” and the development will be based on Ant’s Group platform.
The report revealed that the PBoC has been working together with Ant and Tencent on the digital yuan as well in the past three years. Despite some tension between Alibaba’s affiliate and the multinational technology company Tencent created by the Chinese government, both organizations have remained committed to building the CBDC’s structure and distribution channels.
However, Francis Lun – CEO of Geo Securities – raised concerns regarding the coalition between one of the largest payment providers in the country – 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 return, Ant demanded to lead the development and disputed that ”too much government intervention would drag the industry down.”
The Unique Nature Of The e-Yuan
Officials from China’s Central bank revealed that their CBDC will be one of a kind. According to the VOA report, the e-yuan will be a ”tool for government surveillance.”
Francis Lun said in his turn that the CBDC will enable the government to control every user’s transaction ”like a big brother.” He expressed high hopes that when it spreads abroad the digital yuan can give China a huge advantage and at some point, the country can surpass the economic dominance held by the US.
Lun concluded that PBoC looks at the partnership as win-win cooperation for the involved parties:
”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.”
Even though the mass opinion about the digital yuan is that its goal is to hasten the decline of the US dollar, Anne Stevenson-Yang – research director of J Capital Research contradicted:
”I think there’s too much focus being placed on the idea that this is a totally distinct currency and they are in competition.”