Brian Larson, Senior Associate at JPMorgan Chase and graduate of The Fletcher School at Tufts University reviews Richard Turrins Cashless China.
Turrin’s Cashless is a marathon read. At close to 400 pages, each page is packed with tiny titbits of well-researched data that, when viewed from a 300ft tall vantage point, paint a realistic and optimistic view of the future of banking, finance and the technology that will power these industries into a new ‘cashless’ globe.
Although I lived in China for a short period in 2013, I was a little too early to have a seat to the meteoric rise of digital payments in China. Like many ex-pats, I waited in queues at CCB for hours on a Sunday to transfer money between accounts at the bank and paid for almost everything with cash (人民币).
Although I was active on WeChat and purchased goods from Alibaba, these apps and digital storefronts had yet to become as powerful as digital ecosystems as we see them today in China.
In less than seven years, China has changed the banking and ‘techfin’ (so dubbed by Jack Ma) landscape so much that any American would be left dazzled by the ease and interoperability of China’s cashless society (who knows – maybe that same American would come back and demand the same ease of use and
low fee structure from his/her/their bank, credit card, credit union, etc).
Turrin’s recounting of the regulatory quagmire that fed the peer-to-peer (P2P) lending crisis in China was
illuminating and provided a reasonable and logical rationale as to why the Chinese Communist Party (CCP) halted the initial public offering (IPO) of Ant Financial last year. Sure, Ma’s Basel Accord statement didn’t do much to aid his cause, but this event played little if not any role in the CCP’s shuttering of Ant’s star-studded IPO. Turrin’s juxtaposition of the P2P crisis with the US’s mortgage-backed securities crisis was genius and easily digestible.
Turrin is quick to point out that banks and credit card companies will likely all still be around in the next century but that they will need to swiftly and skilfully adapt to a more consumer-centric model of banking that operates on a new paradigm without excess fees or lacklustre mobile and onboarding support.
I absolutely loved Turrin’s use of example walk-throughs as he explained the many pros and far fewer cons to China’s rolling out of a central bank digital currency (CBDC). Who knew a CBDC could affect everything from the purchase of xiaolongbao from a Shanghai street vendor to the international monetary exchange between China and its BRI cohort. Things get a little more complicated as Turrin posits his own views on how digital currency electronic payment (DC/EP) having a ‘One Coin, Two Repositories, Three Centres’ would flush out in reality. This is forgiven as the end of the book focuses on the many ways a CBDC could improve financial inclusion and dramatically reduce the number of unbanked and underbanked across China (and, for that matter, across the globe).
Last, I really liked Turrin’s rationale around why China’s CBDC does not mean the complete demise of the
dollar (nor is it the People’s Bank of China’s (PBOC) intent). Instead, China is playing the long game and seeking to innovate in a space that has been stale for the better part of two decades.
China’s enlisting of support from international organisations like SWIFT and BIS is a clear indicator that it seeks to work with the existing international monetary framework and not simply blow it up. If the world can come around to cryptocurrencies, it sure can get used to a digital renminbi (e-RMB).
This book has something for everyone. Even for those who question China’s intent with the launch of its
CBDC, Turrin welcomes you aboard his Alipay-purchased ship and quickly combats and demystifies fact from fiction and, at certain turns, admits he doesn’t know all the answers (but he doesn’t use this as a cop-out).
In the end, even the most pro-US reader will realise that he/she/they can benefit a whole lot from understanding the groundbreaking payment trends occurring across China.
