Digital Yuan Aims to Strengthen China’s Financial Monopoly
According to a Cornell University professor, the Chinese government is developing digital yuan to avoid competition from large fintech companies.
The main reason for developing e-CNY was China’s fear of losing its monopoly on the domestic digital payments market and the prospect of competition with private companies. This was the point made by Professor Eswar Prasad, a professor of Trade Policy at Cornell University, in an interview with CNBC.
Among the government’s main competitors in the digital payments market, Eswar Prasad names some fintech conglomerates that control huge amounts of data. The government’s actions in this context aim to create a level playing field for all market participants.
The professor did not name specific companies in the interview, but it might be Alipay and WeChat Pay. According to Statista, 9 out of 10 Chinese use these payment systems.