China’s central bank has further partnered with Ant Group, the fintech arm of Alibaba Group, and internet provider Tencent to develop its digital currency.
Ant And Tencent To Help In Development Of Digital Yuan
According to the Digital Currency Research Institute of the People’s Bank of China (PBC), during the Fourth Digital China Summit held in East China’s Fujian Province, the apex bank said it had signed a strategic cooperation agreement with Ant to help build a technical platform for the digital yuan.
Ant would promote the development of the electronic yuan or e-CNY, using its database, Ocean Base, and its mobile development platform, mPaaS, according to state tabloid Global Times.
The Jack Ma-led company will support the research and development of the digital yuan and its technology platform.
Ant said it would also work to strengthen the communication and cooperation with the Digital Currency Research Institute and enable the implementation of new technologies during the digital upgrading to serve the real economy better.
In the same vein, Tencent disclosed its progress made so far with the digital yuan.
The fintech company said it had provided full support to the digital yuan’s design, research, development, and operational work. It also revealed that it would carry out controlled trials under the instructions of the PBC.
Meanwhile, this is not the first time Ant, and Tencent would be partnering with the central bank to work on the central bank digital currency (CBDC). The country’s two largest payment providers had said that the bank has also been working with them over the past three years to co-develop the digital currency.
Since 2014, China has been developing its CBDC intending to replace some of the cash in circulation.
Digital Yuan May Threaten AliPay, WeChat Share In The Chinese Market
Concerns have arisen regarding the possibility that the digital yuan, when finished, will threaten the already used payment methods in the country, AliPay, and WeChat, owned by Ant and Tencent. Ant and Tencent respectively control 54% and 40% of China’s e-payment market.
As reported by Reuters, China’s six major banks in Shanghai are promoting the digital yuan ahead of an upcoming trial by persuading merchants and retail clients to download digital wallets and use the digital currency.
“People will realize that digital yuan payment is so convenient that I don’t have to rely on Alipay or WeChat Pay anymore,” said an anonymous bank official involved in the rollout of e-CNY for the Shanghai trial, under the guidance of China’s central bank.
Meanwhile, Ant and Tencent’s close ties with the Chinese national bank come as they struggle with the government’s intensive anti-monopoly crackdown and investigation.
Jack Ma’s Alibaba Group Holdings was recently hit with a record $2.8 billion antitrust penalty.