Goldman_Digital_Currency_Reinventing_e.pdf

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currency (known as “DC/EP”). As a gradual replacement for

physical cash, in the early stages DC/EP will facilitate small

payments for consumables such as meals, groceries and

transport, but over time will expand to larger and more complex,

value-added services such as government subsidies and

cross-border payments. Even in a cashless environment, DC/EP

will be an attractive alternative to fintech platforms given its

anonymity, the ability to operate outside of wireless networks,

and interconnectivity among different payment methods.

Successful adoption will ultimately require government

bringing consumers back to bank channels, thereby expanding

their customer base and MAUs. This will likely slow the rate that

banks have been ceding ground to fintech, and even reverse

market share losses over the long-term if DC/EP gains in

popularity. In the meantime, PAB and CMB will benefit most from

DC/EP as they are best placed to commercialize returning app

users thanks to their leading retail franchises, premium client

bases, superior fintech capability and strategic focus on retail

finance.

Yingqi Lin

Shuo Yang, Ph.D.

+852 2978-7436

derek.su@gs.com

Goldman Sachs (Asia) L.L.C.