Thread by @DoveyWan

Justin in, finally a clear direction for Digital Yuan)

ZHOU, former PBOC chairman, the most influential monetary economist in 🇨🇳 said at a forum today

There’re 2 types of CBDC implementations

1. Electronic payment orients domestic retail system (cont.
finance.caixin.com/2019-11-26/101…

2. international remittance oriented usecase for inter-financial institutions settlement

and China will focus on the former direction for its own Digital Yuan, dedicated in domestic retail on ramp and payment

3. He also emphasized “Fiat currency is a symbol of national sovereignty. Central banks, especially the “super sovereign power” should be very cautious when choosing direction. If going under a wrong direction, the downside can be significant, and even a credit crisis may occur”

This is aligned with original expectation, with a scaled-down scope tho

PBoC is the wholesaler, and commercial banks as distributor. The difference is banks won’t be able to apply money multiplier on this portion of M0, and the payment interface can still be wechat/Alipay.

My thoughts:

Since WeChat/Alipay is already global, espially in pan Asia thanks to massive Chinese tourists overseas, using it as a Trojan house to switch on the international remittance in the future is inevitable

The current take is a typical “land and expand” strategy

Also it might be helpful to know who ZHOU is:

He was longest-serving head of PBOC (between 2002 to 2018) since the establishment of PRC

And steered the monetary policy for the fasting growing 15th years in China history

en.m.wikipedia.org/wiki/Zhou_Xiao…

Adding more data point to the “Trojan Horse” strategies of leveraging Wechat/Alipay for future Digital Yuan adoption -

Simply by China outbound tourism, the payment volume can be massive - already hit almost $200B a year spending in 2019