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  • Writer's pictureConnie Chan

Bank of China’s Former VP Says Digital Yuan Going in Wrong Direction – No Advantage Over Alipay

The rollout of China’s CBDC has attracted attention from all over the world, as central banks look to China to examine the successes and failures thus far of their digital currency.

The CBDC was implemented with the goal of making currency exchange more efficient, and with the goal of centralising control of the money into the hands of the Chinese government and their central bank.

Bank of China’s former VP says the digital RMB needs adjustment

The Bank of China’s former VP has made the case that the digital RMB may need some reform, not at its most fundamental levels, but in the ways that it manifests in terms of user experience.

The main problem that the Chinese government has with alternative platforms processing transactions and custody of RMB is that it makes it more difficult for the government to track the ownership and location of the currency, which is contrary to some of the main reasons that the Chinese government wanted to impose their CBDC in the first place.

The manifestation of the RMB must change to compete

The main issue with the digital RMB, according to ___ , is the fact that the user interface isn’t nearly as appealing as it could be.

Mobile applications such as WeChat and AliPay have integrated payments very effectively, and have managed to onboard hundreds of millions of users to their platforms.

This has been welcomed by consumers, who are keen on the better UX and UI that is offered by these platforms.

However, the Chinese government wishes to make some changes in order to be able to retain true control of their citizens’ finances.

According to a recent report: “it is not ideal to rely on commercialization to attract users to increase traffic for promotion”, since this centralises power away from the Chinese government third party companies. Even if these companies are largely affiliated with and controlled by the Chinese government, this remains an issue in terms of simplicity by adding extra middlemen.

China continues to reject cryptocurrencies

Some of the main proponents of cryptocurrencies, and particularly of Bitcoin, advocate for a world in which CBDCs are not used since they centralise power in the hands of a few, and strip property from the rest.

On a Bitcoin standard, this would not be the case, and free enterprise and commerce would be able to flourish in a way that it currently is not able to.

However, China has continued to reject the possibility of adopting Bitcoin, and after the mining ban in 2021 the Chinese share of the hash rate has fallen significantly.

Nevertheless, the Chinese government does still hold a lot of Bitcoin in their national reserves (alongside ETH, DOGE, and some other alt coins) after having seized it from the Plus Token ponzi scheme.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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