The People'south Bank of Prc is purportedly planning to apply its digital currency electronic system (DCEP) — another moniker for its central bank digital currency — to target the dominance of technology giants like Alibaba and Tencent in the digital payments sector.

The study comes only a few days after claims of the central bank prompting a top antitrust agency to launch a probe against Alipay and WeChat Pay for using their potency to suppress competition.

According to the Fiscal Times, even regulators and executives of Alibaba'southward financial group Ant agreed that PBoC will target the market dominance of Alipay and WeChat pay.

As of now, Alibaba'due south fiscal subsidiary Alipay and Tencent'due south WeChat Pay command a majority of the digital payments across China while banks are left far behind in the competition. In the first quarter of 2022, Alipay processed almost 56% of all mobile payments in Communist china.

The primal depository financial institution is levelling the playing field

According to the details received by Financial Times from several officials familiar with the central bank's strategies, PBoC will use the DCEP to provide banks equal opportunities in the field of digital payments equally information technology before did to engineering giants.

Reflecting on the unprecedented opportunities given to technology giants to leverage digital payments, the head of Asian economical inquiry at a big international bank said that the erstwhile PBoC governor Zhou Xiaochuan had allowed Alipay and WeChat Pay "to abound into monsters" despite complaints from Chinese banks and the China Banking Regulatory Commission.

In a separate statement, a senior official of the Hong Kong Monetary Say-so familiar with the matter said:

"They [PBoC] want a more level playing field for the banks. Retail payments are so dominated by Alibaba and Tencent while banks are less agile in electronic payments."

Is China battling against Alipay and WeChat Pay?

At the acme of its hype in March, several reports stated that Alibaba and Tencent were both an active part of the "digital yuan" projection. However, last month, a written report from Due south Prc Morning Postal service suggested that Red china was launching its digital currency as an alternative payment pick for Alipay and WeChat Pay. Cointelegraph also reported that both these companies were not on the list of participants of China'due south digital currency project.

Conversely, some believe that the DCEP volition not work against Alipay and WeChat Pay merely rather integrate them into the organization for faster and smoother digital payments. It must also exist noted that Alipay has several patents related to Communist china's digital currency, which is indicative of the fact that the visitor is still non completely out of the game.