May 14, 2021 10 min read

China: the journey to a cashless society

China: the journey to a cashless society

Wiser! #14 (Premium): Central Bank Digital Currencies are coming. It's not a question of whether, but when. And China has stolen the march and is years ahead of the rest of the world.

Premium Content

Strategic Insights: A vision of what's to come with CBDCs, Digital Payments, QR codes, frictionless payments

If you saw the subject heading of this article and thought “not interested, I’ll skip this”…THINK AGAIN!

This a story you need to know about.

It’s a story of how China turned the world’s largest populace into a nation without the need for cash. The old, the young, the poor and uneducated, from the beggars on the street to the largest businesses.

It is also a story about Central Bank Digital Currencies, aka CBDCs. A 4 letter acronym that you’ll be seeing a lot of as more governments begin the transition to Digital Currency.

Insight from an Expert

To help me explain this lesson in mass-scale cultural and technological transformation, I turned to an expert with first-hand experience of this fascinating story.

Richard Turrin is/was a banker, a business school professor in Shanghai, and an IBMer with a brief to "reimagine banking" in Singapore. He went freelance as an AI and innovation consultant, writing a highly acclaimed best-selling book called "Innovation Lab Excellence".

Richard has lived in China for the past 11 years and experienced firsthand China's rapid transformation into a cashless society.

rick huckstep cbdc alipay wechat wechatpay digital payment

There is nobody better qualified to tell the story of how China moved the entire population of the world's most populous nation over to cashless payments. A story that he has written for his second book, called "Cashless: China’s Digital Currency Revolution".

Much of the content for this article is taken from Cashless, although I only scratch the surface of the subject covered by the book.

To accompany this article, Richard and I recorded a zoom call recently.

What do we mean by Central Bank Digital Currency?

rick huckstep cbdc alipay wechat wechatpay digital payment
Source: DAML

Simply, a CBDC is a digital version of real money. Just like a banknote or coin, it is a form of money that is issued and backed by a central bank in the same way as the cash you have in your physical wallet right now.

But don't confuse a CBDC with cryptocurrency, because they are not the same thing. They share some similar properties, such as they are both controlled using cryptography. And they are both digital assets that can be programmed to behave in certain ways.

But, where they differ is that a CDBC is a legal tender.

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