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e-CNY is available in Hangzhou now. It’s not another payment option, though you are pretty much likely to think so. Let’s take a close look at it:
- In terms of e-CNY, there are two concept: the e-CNY wallet App and the currency e-CNY. The former is what you see and the latter is what you don’t. The former is a payment method while the latter is not.
- Think the e-CNY wallet App as a digital version of your in-pocket wallet, not another Alipay account.
- The currency e-CNY is a counterpart of CNY cash, or I may say an invisible version of it. It’s a new type of currency. Yeah, now we have three types of fiat money in China: paper money, coins and e-CNY.
- Banks are the only way it goes to the public.
- The existing banking systems are designed for cash management. However, e-CNY totally is a new thing to them. It’s not at all compatible with saving, credit cards, loans, interest, etc.
- So there is little that banks can do after creating an e-CNY wallet account for you. They convert cash to e-CNY and save it in you e-CNY wallet. Then the money is almost out of their reach, just like cash taken from ATMs. Well, it is still under PBOC’s controll though.
- You see e-CNY and bank cards in Alipay and Wechat Pay. But what they do is only building bridges, giving you access to all accounts in just one App. xPays don’t controll the money, except in one condition: you are paying with the account balance. In that case, the internet giants pay for you with their own bank accounts, and then deduct the same amount from your balance.
- See the dash lines? If your e-CNY wallet stays at categroy 4, merchants won’t be able to know who they are trading with. It’s as anonymous as cash. Still, PBOC knows.
- There is also difference in terms of clearing. e-CNY doesn’t rely on China UnionPay. It’s another story.
- It makes no sense comparing e-CNY with Alipay. They are not at the same layer. It is the existing banking system that you should compare it with.