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Finance

Why mobile payments are worrying China's central bank

Alipay, WeChat Pay seen as weakening PBOC's grip on money supply

| China
The trend toward cashless payments in China, dominated by the country's big internet companies, could weaken central banks' hold over money supply.   © Reuters

For most Chinese officials, the sweeping trend toward the use of mobile phones to make payments is a point of pride in the nation's technological advancement.

For those at the nation's central bank charged with managing the financial system, however, the rapid rise of cashless payments is raising concerns over their grip on the country's money supply. The People's Bank of China's previous open-mindedness toward innovation is slipping, as seen by a burst of recent announcements that will see an effective floodgate put up between banks and the internet companies which provide mobile payment services. While the central bank's concerns are justified, hasty intervention could curtail the astounding pace of private-sector development of new services and technologies in the country.

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