Future of money in Asia

24 March 2021

Future of money in Asia

The global financial sector is undergoing rapid changes, and Asia is driving some of its biggest developments. From pioneering digital currencies to launching digital securities markets, Asia is at the forefront of the movement. These two articles showcase the region‘s important milestones.

China and the race for the future of money

Amid the explosive growth of cryptocurrencies and digital payments, China’s central bank is launching a fully digital fiat currency. Known formally as digital currency electronic payments (DCEP), digital renminbi is incorporating blockchain and near-field communication to enhance security and foster money transfers. As commercial transactions increasingly shift to digital platforms, DCEP is hoped to further facilitate domestic, as well as global commerce for Chinese companies.  It is also seen as a more secure alternative to traditional currencies with a potential to raise renminbi’s profile in global money markets.

Virtual currencies are expected to gain from the growing momentum. Monetary authorities around the world are continuing to provide clarity in this space, while banks and other financial institutions are among those driving the change. As digital transactions become more intuitive, more companies are poised to adopt the new technology, allowing for not only individual transactions, but also business-to-business commerce. Although there’s a long way to go, the trend toward digital currencies seems clear.

Read the full article on the PwC website

Singapore emerges as Asia’s digital securities trading hub

Singapore is emerging as a trading hub for digital securities that are powered by blockchain, a secure ledger system for digital transactions. Compared to traditional public exchanges, digital securities exchanges allow for instant settlement at lower cost as well as fractional ownership of the asset. They often involve alternative assets, such as private equity or real estate. The volume of such nonlisted assets in the Asia Pacific region was estimated to be around $1.6tn in 2019 and expected to triple in the next five years. In addition, digital securities exchanges have much lower listing requirements, providing young startups with more fundraising opportunities.

While operators see huge potential, digital securities markets have many issues to overcome before they can seriously challenge the traditional exchanges. As such, digital exchange operators need to address any user reluctance to trade in cyberspace and consider security, privacy, and corporate governance issues that may arise. Another challenge is pricing of the underlying assets and low liquidity. If the digital securities exchanges manage to answer these questions, they may become a legitimate rival for traditional exchanges.

Read the full article on the Nikkei website

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