Today the BIS published a working paper entitled “The digitalization of money,” in which the unbundling of money is predicted. Fiat money is expected to have three sets of functions. It should act as a store of value, a medium of exchange, and a unit of account. However, as cryptocurrencies are already showing, some digital currencies or money might provide the store of value function. Others may be used as a medium of exchange for payments—hence the conclusion re unbundling.
And digital money is associated with a platform not a country. Alipay owner Ant is used as an example on multiple occasions.
The three University academics that wrote the paper see a re-bundling happening with different functionality, such as for data gathering or social network sites. It’s no coincidence that the two major digital wallets in China are owned by Ant, which aggressively uses data, and social network WeChat. The authors argue that a payment platform is the best possible way to gather data.
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