Alibaba founder Jack Ma suggested that digital currencies should be the basis of a new financial system—one better suited to China’s huge but still-young economy.
Attacking the traditional financial system as too focused on risk prevention, Ma said on Oct. 25 that regulators are stifling opportunity for young people and new economies, according to Bloomberg.
Speaking at the Bund Summit in Shanghai on Saturday, Ma said:
“Digital currency could create value and we should think about how to establish a new type of financial system through digital currency.”
He argued that regulators should shift part of their focus to development, as he claims that they have focused solely on risk control ever since the Asian financial crisis.
Ma insisted that the banking regulations known as the Basel Accords help solve the problems of old financial systems, but do not fit the needs of developing economies like China. This is where digital currencies come in, he said, arguing that they will play an important role in building the type of financial system that will be needed in the next thirty years.
Ma founded Alibaba—a Chinese ecommerce giant with a yearly revenue of nearly $77 billion—in 1999. Since then, he has also taken on finance with his Ant Group fintech firm, which owns the wildly popular Chinese mobile payments service AliPay, which has 730 million monthly users and 55% of the market
China is well on the way to developing the first major digital currency, the digital yuan renminbi, also known as Digital Currency/Electronic Payment. The system has been widely tested in major cities including Beijing and Hong Kong, and on Sept. 21 the People’s Bank of China said the digital yuan was ready to go.
On Oct. 12, the city of Shenzhen held a lottery giving 50,000 citizens a total of $1.5 million digital yuan renminbi to spend. The test was a resounding success, with 95% of the winners downloading digital wallets and spending their 200 yuan at some 4,000 participating merchants over the next week.
On the day after Ma’s speech, the head of the research institute for digital currency at the People’s Bank of China said that the central bank digital currency won’t compete with the dominant mobile payments services of AliPay and WeChat Pay. Instead, he said, they will act as a digital wallet for the new digital yuan.