China has emerged as the global leader of CBDC (central bank digital currency) development, and this has driven speculations about the country's international and domestic intentions for its central bank digital currency.
Glenn Woo, the head of the Asia-Pacific region for Ledger Vault, believes that China can deploy their CBDC using existing payment rails without citizens realizing the change. He predicted that the country's state-backed currency would be the first to launch globally.
Glenn Woo also emphasized the speed with which the government of China can deploy CBDC on a national scale. For example, early central bank digital currency trials with 19 businesses such as McDonald's and Starbucks have the potential to grow and encompass a much larger scale.
Woo believes that China's CBDC can be among the first real CBDC to use internationally.
No one will notice changes According to analysts, China seeks to regain control over domestic payments through CBDC, as Woo estimates that WeChat Pay and AliPay processes over 96% of small retail transactions. But, Glenn Woo provides a more subtle explanation.
He asserts that China's central government permitted the growth of digital payment platforms, which align with many of the regime's objectives. In turn, this centralized the majority of China's financial activity on several financial platforms, including areas outside the government's reach, e.g., rural regions.
With time, Glenn Woo predicts that existing digital payment rails will slowly integrate central bank digital currency, without disrupting the country's economic activity. This will offer China's government more control over the retail economy and provide more insight.
For instance, retail users won't necessarily know what has changed as they'll still use WeChat to shop, transfer money, or call a cab. Woo adds that the integration will be seamless, and no one will know the difference.
China to use CBDC globally Glenn Woo predicts that China's government will use CBDC to bypass USD in international trades, driving trade settlements in Chinese currency. Countries that rely on Chinese imports and other trading partners will conduct settlements using CBDC.
However, with the economic recession, Woo doubts the success of this strategy in the short term due to an increase in protectionism globally.