China CBDC to back up AliPay and WeChat Pay, says PBOC official

26 Mar 2021

The main aim of China’s central bank digital currency (CBDC) is to backup major retail payment services such as AliPay and WeChat Pay.

This is according to a People’s Bank of China (PBOC) official on Friday.

Head of the People’s Bank of China’s digital currency research institute, Mu Changchun said that China’s digital yuan is needed to ensure financial stability if “something happens” to AliPay or WeChat Pay, says a South China Morning Post report.

During an online panel discussion on Thursday Mu said that Alibaba’s Alipay and Tencent’s WeChat Pay make up 98% of China’s mobile payment market, which would represent certain risks should any issues arise.

Mu added: “If something happens to them, financially or technically, that would definitely bring a negative impact to the financial stability of China. In order to provide a backup for the retail payment system, the central bank has to step up and provide a central bank digital currency service.”

China is cracking down on monopolistic practices within the private sector, as the country’s digital payment network is dominated by Ant Group and Tencent, Cointelegraph reports.

At the beginning of the month, China’s antitrust regulator fined Tencent for not disclosing their acquisitions.

Also, beforehand Chinese authorities flagged up a $37 billion IPO by Ant Group due to concerns about the firm’s size.

During the panel, Mu also called on central banks around the world to cooperate to ensure CBDCs are compatible with one another: “Central bank digital currency supplied by one central bank should not impede another central bank’s ability to carry out its mandate for monetary and financial stability.”