Fintech Innovation in China

Abstract

This column discusses innovation in payment platforms in China and what Western central banks and governments might learn. Private Chinese companies led in the introduction of the mobile payment systems Alipay and WeChat Pay, using QR codes, and most transactions in the country are now digital. China also has banned private crypto currencies and stablecoins and introduced a public digital currency and payment system using crypto technology. However, it has been very difficult to get users to switch to the new central bank digital currency, despite aggressive promotions, subsidies, and mandates. China's experience suggests that other central banks around the world will have difficulty introducing their own digital currencies and competing with private stablecoins and cryptocurrencies as well as other private digital payment platforms.