![]() We’re less confident about this latter point, but certainly, there’s a significant advantage in working with UnionPay for integrating with retailers. Our simplistic thinking is if UnionPay is allowed to convert bank money into digital currency, then perhaps it can do that on behalf of numerous banks. Is there a possibility that UnionPay could somehow act as a hub for smaller banks reducing the central bank systems’ workload? The big commercial banks can convert central bank money into digital currency. Hence that oversight mechanism could be used for digital currency as well.Īlso, the latest eCNY trials involve six banks, whereas UnionPay has relationships with most banks. The purpose was to provide the central bank with better oversight. Since 2018, WeChat Pay and AliPay have been required to process barcode payments linked to bank accounts via UnionPay’s platform. That’s unless the central bank chooses to bear that cost.Īnother potential advantage for the central bank is regulatory supervision. The downside is that by adding another middleman, you add another layer of cost, and one of the benefits of digital currency is saving money. That’s important because the digital currency will be legal tender, and hence it should be simple to adopt. If instead stores use existing card infrastructure, it could accelerate adoption dramatically and considerably reduce the friction involved in adoption. To date, tests involved signing up retailers to accept the digital yuan.įor example, the latest trial in Suzhou involves 10,000 designated bricks and mortar stores. ![]() Potentially this could mark an acceleration in the digital currency trials.
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