The inaugural Bund Financial Summit, co-hosted by the China Finance 40 Forum, Huangpu District Government, and various organizing institutions, concluded yesterday in Shanghai. Over three days, financial leaders gathered to discuss the future of digital finance and global economic transformation. Among them, Huang Qifan, Vice Chairman of the China International Economic Exchange Center, delivered a keynote speech highlighting China’s progress in digital currency development and the broader impact of digital technologies on finance.
Huang emphasized that the People’s Bank of China (PBOC) has been researching its Digital Currency Electronic Payment (DCEP) system for five to six years—and is now on the verge of launching what could become the world’s first sovereign-backed central bank digital currency (CBDC). Unlike simple digitized versions of cash, DCEP is designed as a direct replacement for physical cash in circulation, or M0, offering enhanced traceability, efficiency, and control over monetary policy.
The Core of Digital Transformation: Five Key Technologies
Huang outlined how digital transformation rests on five foundational technologies: big data, cloud computing, artificial intelligence (AI), blockchain, and internet-of-things (IoT). He likened this ecosystem to the human body:
- Internet and IoT form the nervous system.
- Big data represents internal organs—vital but inert without structure.
- Cloud computing acts as the spine, providing structural support.
- AI functions as the brain, enabling decision-making and automation.
- Blockchain is akin to advanced genetic engineering—enhancing speed, security, and flexibility at the foundational level.
Together, these components create what Huang calls the "five-all genes" of digitalization:
- All-space (全空域) – seamless connectivity across regions, environments, and borders.
- End-to-end process (全流程) – continuous data capture throughout all economic activities.
- All-scenario (全场景) – integration across every aspect of life and work.
- Full analytics (全解析) – AI-driven insights predicting behavior and creating new value.
- All-value (全价值) – breaking silos between value systems to generate unprecedented economic chains.
These attributes empower digital platforms to disrupt traditional industries when integrated—giving rise to Industry 4.0, smart logistics, smart cities, and most critically, fintech.
👉 Discover how blockchain is reshaping financial infrastructure today.
How Digitalization Is Reshaping Global Finance
When digital technologies intersect with finance, they trigger a fundamental shift in payment systems, settlement mechanisms, monetary policy, and operational efficiency.
1. Revolutionizing Personal Payment Systems
Before mobile payments, China relied on cash, credit cards, and UnionPay for transactions. While UnionPay standardized domestic card payments, it lagged behind in innovation. The real leap came with the rise of Alipay and WeChat Pay, which now serve over 1.4 billion users.
In 2018 alone, China’s mobile payment volume reached approximately **$39 trillion**, dwarfing the U.S. figure of $180 billion. This dominance extends globally—Chinese tourists can use mobile payments in stores across Southeast Asia, Europe, and North America.
Beyond convenience, mobile payments have enabled new business models based on shared access rather than ownership, such as bike-sharing and co-working spaces. By recording transaction histories, these platforms generate valuable credit data—fueling inclusive financial services.
However, Huang warned against rejecting cash entirely. Under Chinese law, no merchant may refuse RMB in physical form. Over-reliance on digital systems also poses systemic risks—natural disasters or cyberattacks could disable entire payment networks.
Blockchain is further transforming cross-border remittances. Instead of relying on slow, serial processing through intermediaries, blockchain enables parallel verification among banks and payment providers—dramatically reducing time and cost.
2. Rebuilding Trade Clearing and Settlement Infrastructure
Currently, international trade relies heavily on SWIFT (Society for Worldwide Interbank Financial Telecommunication) and CHIPS (Clearing House Interbank Payments System), both dominated by U.S. influence.
- SWIFT handles up to $6 trillion daily, serving nearly 11,000 institutions worldwide.
- CHIPS processes over 90% of global dollar transactions.
While efficient historically, these systems are outdated—transactions take 3–5 days, involve high fees (often 0.01% per transfer), and pose geopolitical risks. The U.S. has used access to SWIFT as a tool for sanctions—for example, cutting off Iran in 2006 and threatening Russia during the Ukraine crisis in 2014.
Huang argued that in the digital age, such centralized systems are unsustainable. In contrast, blockchain-based decentralized ledgers offer transparency, immutability, and faster settlement—making them ideal for next-generation clearing networks.
Over 24 governments are already investing in distributed ledger technology (DLT), and more than 90 multinational corporations are participating in blockchain alliances. The EU, Japan, and Russia are exploring alternatives to SWIFT using encrypted digital currencies.
👉 Explore how decentralized networks are challenging legacy financial systems.
3. Reforming Global Monetary Policy
Historically, money evolved from commodities (shells, gold) to fiat currency backed by state credit. Since the collapse of the Bretton Woods system in the 1970s, currencies like the U.S. dollar have been anchored to national sovereignty rather than gold.
But this model encourages monetary over-issuance. Global central bank balance sheets grew from under $1 trillion in 1970 to over $21 trillion by 2017—with the U.S. national debt surpassing its GDP.
Private cryptocurrencies like Bitcoin and Libra (Diem) attempted to offer alternatives but lack stability due to their lack of sovereign backing. Huang dismissed Libra’s potential: “Without a solid issuance foundation or stable value anchor, it cannot represent real social wealth.”
Instead, he advocates for sovereign digital currencies issued by central banks, where digital money remains tied to national credit while gaining the benefits of programmability and traceability.
China’s DCEP fits this vision perfectly:
- Built on blockchain-inspired architecture.
- Operates via a two-tier system: PBOC issues DCEP to commercial banks, which distribute it to the public.
- Replaces M0 (cash) rather than bank deposits.
- Enables real-time tracking of money supply, circulation speed, and usage patterns—empowering better monetary decisions.
This level of insight was impossible with paper currency—and positions China at the forefront of financial innovation.
4. Boosting Industrial Efficiency Through Digital Finance
With 5G enabling mass connectivity, the internet is shifting from consumer-focused (to C) to industry-focused (to B). Smart factories, autonomous vehicles, and connected supply chains will generate vast amounts of data—ideal for integration with financial services.
Huang sees two paths for digital finance:
- “Internet + Finance”: Tech platforms launching financial arms (e.g., Ant Group).
- “Finance + Internet”: Banks building digital ecosystems.
Past excesses—such as non-financial firms chasing licenses or financial groups piling on leverage—led to regulatory crackdowns. Going forward, sustainable growth lies in collaboration: digital platforms provide data; financial institutions provide capital.
For instance, a logistics platform tracking thousands of shipments can partner with lenders to offer working capital loans based on real-time delivery data—reducing risk and expanding access to credit.
This synergy creates a digital financial ecosystem that enhances efficiency, lowers costs, and supports inclusive growth.
Frequently Asked Questions (FAQ)
Q: What makes DCEP different from Alipay or WeChat Pay?
A: Alipay and WeChat are digital wallets holding electronic balances in traditional bank accounts. DCEP is actual legal tender issued by the central bank—like digital cash. It doesn’t require a bank account and works offline via near-field communication (NFC).
Q: Can DCEP replace the U.S. dollar internationally?
A: Not immediately. But by improving cross-border payment efficiency and reducing reliance on SWIFT, DCEP could accelerate RMB internationalization over time—especially in trade settlements with Belt and Road partners.
Q: Is DCEP a surveillance tool?
A: While transactions are traceable for anti-money laundering purposes, small-value transactions may remain pseudonymous. The system balances privacy with regulatory oversight—similar to cash monitoring limits.
Q: Will DCEP eliminate physical cash?
A: No. Cash will coexist with DCEP for the foreseeable future. However, as adoption grows, physical cash usage may gradually decline.
Q: How does blockchain enhance DCEP?
A: While DCEP uses blockchain-inspired features like encryption and distributed ledgers, it operates under centralized control. Blockchain ensures integrity and auditability without sacrificing regulatory authority.
Conclusion: A New Era of Digital Monetary Systems
Huang Qifan’s vision underscores a pivotal moment in financial history. As digital technologies mature, they are no longer just tools—they are becoming the backbone of modern economies.
China’s DCEP project exemplifies how a nation can leverage innovation to strengthen its monetary sovereignty, improve policy precision, and lead in global financial infrastructure development.
With the PBOC likely to launch first, the world may soon witness the dawn of a new era—one where money is not only digital but intelligent, traceable, and programmable.
👉 Stay ahead of the curve in digital currency innovation—learn more now.