The Digital Yuan: China’s Secret Weapon
DIGITAL YUAN / CHINA CBDC - THE NEW TRADE TOOL THAT IS HERE TO STAY!
Technology is transforming payments. Digital innovation is disrupting the instruments (e.g cash, stocks & bonds) and institutions (e.g Banks, governments.) that have historically dominated payments.
Electronic payment system have granted users a lot of convenience when it comes to interact with other merchants.
CBDC's could be an alternative for SWIFT
which is simply a communication platform that gives instructions for international banking transactions.
We shift from the internet of communications to the internet of value.
Digital yuan china digital currency
2013 started as a side project.
2017 The government pushed the project and it was taken more seriously
2020 & 2021 is already a pilot program in different cities and thousands of businesses.
Retail payment systems are becoming increasingly convenient, instantaneous and available 24/7.
Nevertheless, payment systems still suffer from shortcomings in two areas:
-access.
-cross-border payments.
The number of big Banks, closing a high share of cross-border payments, fell by about 30% between 2011 and 2018. Making cross border transactions more expensive, and more difficult to access to the global banking system
Every financial crisis, the incumbent banks come out bigger and more powerful and the rest of the population weaker and more dependent. As a consequence they are under pressure from both fintech startups and technology giants.
VALUE PROPOSITION OF DIGITAL RENMINBI
• Peer to peer - online / Bluetooth / Hardware to hardware
• Centralized Regulation: Central Bank's regulatory framework (KYC, anti money laundering, monetary rules)
• Security: Prevents paper money counterfeit from individuals.
• Easy adoption: Fast to open bank account - We chat / Paypal / Alypay & Tencent /Alibaba
• Bag data assumptions: Data collection will tell Central Bank how to take a better path for the monetary policy and creditworthiness, citizen score, Prevent crimes, Heath policy.
• Privacy: prevents data collection from corporate sector not from government – Has no interest in sell your data, it is not it's business model. What is regulated is the handling of data, not data collection.
• Entry ticket to China's Logistics Network (real time product tracking, supply chain management and accountability)
Central bank digital currencies (CBDCs) open possibilities for easy bilateral trade and settlements sidestepping the USD or including it.
A key difference with CBDC is that a Central Bank will have absolute control on the rules and regulations that will determine the use of that Central Bank liability, and will have the technology to enforce that.
This makes a huge difference and a concern to trust and privacy infrastructure.
0:00 Intro
0:58 Disruptive innovation of payment systems internet of value
3:12 Distributed Ledger Technology vs account based technology, private public ledgers
6:30 Quote Agustin Carstens BIS CBDC
6:55 Why CBDC's are a viable option (Fiat, debt, spending and money printing)
9:04 Retail Payment systems & Cross Border Payment
12:48 Value proposition: Digital Yuan / Renminbi / China digital currency
18:25 What is the ECB doing with the Wide APP Wallet
20:14 Bank For International Settlements
21:07 Bis Innovation Hub behind CBDC (Central Bank Digital Currency)
24:33 Institutions Behind CBDC
26:17 Bilateral Trade and de-dollarization
#TIEFINANCE #CHINA #CHINADIGITALYUAN #CBDC
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