. The IMF saw risks for digital government currencies due to payment giants

Existing payment providers threaten a monopoly on digital government currencies, as they cover up to 90% of digital payments in some countries, the IMF found out

Payment providers can form a monopoly in the digital payments market, which threatens the development of central bank digital currencies (CBDCs). This opinion was expressed by experts of the International Monetary Fund in a June study of the digital currency market in Asia.

According to experts, in China, the risk of monopolization of the digital payments market has actually been realized. Analysts note that back in 2020, Alipay and WeChat Pay alone accounted for up to 90% of digital payments in China. In other Asian regions, the situation is not so deplorable, but there are also signs of the formation of a monopoly. In Singapore and Malaysia, a third of payments are made through the GrabPay payment system, and in India, about 26% of payments are made through Paytm.

Despite the threat of a monopoly, the IMF believes that CBDC developers can still promote the use of digital government currencies. To do this, central banks should establish a clear mechanism for exchanging data for third-party providers such as private payment systems. The free exchange of CBDCs can help integrate digital government currencies into existing payment systems, the IMF believes.

Earlier, China has already tried to promote the use of CBDCs, but not by integrating them into payment systems, but by blocking them. Recall that in 2022, China restricted payments in the Olympic Village for Alipay and WeChat Pay. According to Bloomberg, the only payment methods were cash, Visa cards, and the digital yuan.

Later, however, the Chinese authorities changed their approach to promoting the digital state currency. In April 2023, Beijing expanded the use of the digital yuan through the WeChat messenger. The authorities have allowed the use of CBDC among bloggers and app developers.