The former president of the People’s Bank of China said that the efforts for fighting with novel coronavirus could push China’s central bank’s plan to issue a digital currency to avoid the spread of the virus through traditional money notes.
In an interview with China Daily, on February 16, Lihui Li argued that the bank’s plan had been made especially desirable as a digital currency is efficient, cost-effective, and convenient. Previously, Li directed the People’s Bank of China and now deliver his services as the blockchain lead for the state-operated National Internet Finance Association.
For the prevention of the spread of the coronavirus through physical cash notes, the government has distributed about 600 billion Yuan that is approximately $85.9 billion and quarantined some old paper notes in Huobi, where the outbreak of virus took place initially. Meanwhile, millions of people are unable to make any payment as they are restricted to their homes following a government order.
Moreover, Dong Yang, a professor at the Renmin University of China who works on blockchain and fintech research said that as an alternative to money, other digital currencies and other forms of digital payment as offered by Alipay and WeChat Pay have become popular.
According to Dong, the overall implication of the epidemic virus will further boost the development of CBDC.
“This is because the frequency of direct contact between people has been significantly reduced, and cash has been withdrawn as a medium for transactions,” Dong said.
However, Li also added that the adoption of any digital currency by the central bank is still dependent on the demand from China’s retail market, Alipay and WeChat Pay currently rule that.
“China’s modern and emerging electronic payment platform is very mature, and WeChat Pay and Alipay online payment platforms have ranked first and second in the world,” Li expressed.
The professor also believes that, for a short period, individuals will be more interested in digital currency transactions, and this trend will help build user affection. Digital currencies will take advantage of this by accelerating their adoption.