Will CBDC Rollouts Force Tech Providers to ‘Cannibalise’ Their Own Systems?

Several countries have deployed a CBDC, including The Bahamas and Nigeria. While no major economy had launched one prior to this year, the People’s Republic of China was determined to be the first. There is always a first mover advantage, and China was willing to have the yuan as the first CBDC among competitors, such as the US, Europe, and Japan. A crucial factor at play here is driving innovation and disrupting the payment ecosystem, while preserving the safe and efficient functioning of the payment ecosystem. The main question being asked is, how will these growing CBDCs impact current payment providers?

We’ve already seen early partnerships unfold, including Tencent-owned WeChat’s support of China’s digital yuan, e-CNY. This is an interesting move from the country’s largest messaging app and payment service, as, in effect, they are potentially cannibalising their own systems by allowing customers to use the digital yuan instead of their own existing payment options. 

The People’s Bank of China (PBoC) declared the digital yuan as a retail CBDC aimed at domestic retail payment demands. However, it has also been made…

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