The much-awaited Bank of China’s cryptocurrency could be a move by the bank to help curb Alipay and WeChat Pay dominance in the financial sector.
Appearing on South China Morning Post financial analyst, Cindy Wang, a renowned analyst with DBS Research Group, claimed that the country is set to benefit as investors and merchants will be attracted by a state-issued cryptocurrency.
Wang said that Alipay and WeChat Pay accounts for more than 90 percent of the mobile payment market. This draws away deposits, with the analyst saying the Bank of China’s proposed digital currency will help banks stem the leak and bring back deposits.
Wang said that banks’ participation in the central bank’s digital currency will help them better compete with third party payment network operators.
The analyst said that at the moment banks are under immense pressure to retain their deposit base since most of the money is distributed by third-party payments.
According to Cointelegraph, it is possible that the central bank’s digital currency is ready for issuance. The outlet claims that using its central bank, China accelerated the development after Libra was announced as Chinese authorities view it as an imminent threat.