China has emerged from the impact of Covid-19 relatively unscathed, but for the country to progress at the same rate as in previous years, some changes will be needed to how it runs its banks and economy.
While the country’s banks continue to occupy the top four positions in The Banker's Top 1000 World Banks ranking in 2021, they are feeling some strain. One pressure is coming from the People’s Bank of China’s move to establish a central bank digital currency (CBDC). The CBDC has been developed with the banks playing an integral role in the system as intermediaries for deposits and funds, which provides them with the opportunity to collaborate with fintechs and develop e-wallets. The CBDC may also, ultimately, remove the need for cash, which could eliminate the cost of handling physical money and operating ATM machines. But integrating the new currency would likely require a revamp of the banks’ IT systems, which may prove costly for smaller financial institutions.
