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15 Jan 2023  (706 Views) 
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China


Create a new platform for payment of CNH
Currently, the Alibaba platform quotes prices in USD. The customer places an order on the platform and make payment to the seller in USD throughthe SWIFT system. The customer has to pay high charges to the bank. (The screenshot below shows that the Alibaba website in China shows prices only in USD).

I suggest that China authority ask Alibaba and other e-commerce platforms to quote their prices in CNH (i.e the international RMB) and pay through a new internet based platform (IBP) to be operated by its central bank, i.e People's Bank of China (PBC). 

The IBP platform can allow its users to open an account and hold a balance in CNH. They can pay to the seller using this platform.  IBP can pay interest on the balance at a rate that is comparable to the interest that can be earned on USD. The balances in the IBP can be guaranteed by PBC.

Payment between buyer and seller on the IBP platform can bypass the SWIFT system. The IBP platform can link to SWIFT or other platforms to handle transfers between IBP and the banking system. 

The implementation can be carried out in stages. Initially, the sellers can quote the price in both USD and CNH. They may offer low processing charges for payment using CNH to encourage more buyers to use this channel. 

After a period of time, payment in USD can be removed totally from the e-commerce platforms.

Tan Kin Lian
 


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