The director of the Digital Currency Research Institute at the People’s Bank of China (PBoC) said the digital yuan is necessary to provide a backup to Alipay and WeChat Pay.
- Speaking at the Bank for International Settlements (BIS) seminar on Thursday, Mu Changchun said Alipay and WeChat Pay together make up 98% of the mobile payments market, and one key reason the PBoC is developing its own digital yuan is to provide a “backup” payment option, according to a Bloomberg report.
- Mu suggested if "something bad" were to happen to Alipay or WeChat Pay, financially or technically, it could have a "negative impact" on the stability of China's financial system.
- In order to provide backup for the retail payment system, the central bank has to step up its own digital yuan.
- China is leading other major nations in developing central bank digital currencies (CBDCs), but the digital yuan project has raised concerns about the amount of insight it would give authorities into users’ financial data and behavior.
- At the BIS seminar, the PBoC proposed a set of global rules for monitoring CBDCs and shared its proposals with other central banks and monetary authorities.
- In February, a report emerged stating that MYbank and WeBank – institutions backed by Chinese giants Ant Group and Tencent, respectively – were set to join the ongoing trial of the digital yuan.