The Central Bank of the Communist Party of China (CPC) has made Ant Group a strategic partner in the development of the digital yuan technology platform. Industry experts have analyzed that the CPC has already taken the first step in pushing the digital yuan, but private financial technology companies such as Ant Group are needed to provide technical assistance, which represents an attempt by the CPC to gradually “nationalize” the consumer data and payment business held by the technology giant. “.
The Voice of America reported on May 4 that Lin Shih-Chieh, director of the Institute of Finance at Taiwan’s Financial Research and Training Institute, said the challenge in advancing the digital renminbi is not only establishing the technical architecture, but also expanding the scope of commercial pilots at the retail end to build its ecosystem and expand its use by the private sector. Only through pilot cooperation with large retail enterprises can the CPC central bank further identify issues such as system security or business procedures faced in the actual operation of digital RMB. Therefore, the next phase of retail business will be the key to the success or failure of the digital RMB.
Lin said that if the problems on the retail side are not solved, the digital renminbi will not be able to move forward. The biggest concern for officials now may be that the digital renminbi will not be recognized and used by the private sector after it is launched, which will greatly reduce the benefits of digitizing the renminbi.
Lin said that Alipay and WeChat Pay account for about 54 percent and 40 percent of China’s e-payment market respectively, and that the Communist Party fears that if these two companies join forces, they could “become China’s second central bank. Therefore, the CCP’s central bank is taking the opportunity to cooperate with a large private giant to gain market share in the payment market and eliminate a “hidden problem” in the minds of the CCP officials, so to speak.
According to Lin, in an atmosphere of tightening technology regulation and cracking down on monopolies, Chinese private companies may have to cooperate with the government in order to survive as a whole, on balance.
In addition to the payment market, Lin believes that the Chinese Communist Party will continue to target private companies’ data, credit, credit collection and credit assessment businesses, and may increase the nationalization of tech giants or even nationalize them by setting up state-owned enterprises or taking direct stakes in them.
Earlier, the Financial Times reported on April 23, citing sources, that “the People’s Bank intends to take over Ant’s credit data and share it with all state-owned banks.”
According to Lin Changnian, chief executive officer of Hong Kong’s Wisdom East Securities Limited, the Communist Party’s central bank is relying on Ant’s technology to develop the digital yuan, to which Ant has no way to resist and will have to cooperate and give up its users’ big data to the official, because the Communist Party will not allow the enterprise to be too big to manage.
Lin Changnian said the Chinese Communist Party’s regulatory authority’s meaning is clear: it wants Ant Group to take out and share its big data.
With the digital yuan, the Communist Party’s “big brother” can always keep track of the flow of money of individuals and enterprises, and it will be easier to catch financial criminals and even dissidents, Lin said.
Anne Stevenson-Yang, co-founder and head of research at J Capital Research, believes the market has overstated the impact of the digital yuan.
The digital renminbi is not a distinct currency, is not more competitive, and is not fundamentally different from the paper renminbi, according to Yang. At present, the RMB only accounts for 2% of the value of SWIFT payments in international circulation, and cannot become an internationally circulating currency because the Chinese Communist Party does not intend to open up capital controls and does not want to allow (the RMB) to circulate internationally.
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