The pandemic presented the need for an alternative, convenient, and safe payment system that will limit the use of cash which can further help spread the virus. And CBDCs can be a solution.
Goldman Sachs Group Inc (NYSE: GS) has published a report bordering on China’s Central Bank Digital Currency (CBDC) generally known as the Digital Currency Electronic Payment (DCEP) system. As reported by Coindesk, the Goldman Sachs report posits that the virtual currency from the most populous nation in the world will give commercial banks the competitive advantage to match up with fintech giants that have dominated the digital payment ecosystems.
China’s advances with respect to the development of the DCEP system has gained increased momentum this year, receiving an even bigger boost with the coming of the coronavirus pandemic. The pandemic presented the need for an alternative, convenient, and safe payment system that will limit the use of cash which can further help spread the virus.
Goldman Sachs in the report also highlighted some other advantages behind China’s relentless efforts to launch the DCEP. Some of these include eradicating the challenges posed by private digital currencies include Facebook’s (FB) Libra, removing the cost involved in using cash amongst others. The investment giant based on these believes China’s DCEP will take a significant place in the retail payments in the country in the coming years.
“In ten years we expect DCEP to reach 1 billion addressable users, 1.6 trillion rmb ($229 billion) in issuance, 19 trillion rmb ($2.7 trillion) in annual Total Payment Value (TPV) and account for 15% of total consumption payments,” the report said.
Goldman Sachs noted that the consumption offering in terms of digital payments through a mobile platform will be one of the ways in which commercial banks and fintech unicorns will compete for the most. And while China appears to be protective of commercial banks, the international reach of fintech companies may bolster their revenue doubling rate in the coming years in relation to those of the homegrown banks.
Read more: https://www.coinspeaker.com/goldman-sachs-dcep-1b-users/
