22 minute read
China’s digital yuan could be the future of money
A digital currency will allow China to track spending in real-time, along with the money that is not linked to the dollar, which has become the yardstick of financial measurement
CHINESE ECONOMY CHINESE DIGITAL MONEY
JESSICA SMITH
Around thousands of years ago, when the only form of currency the world knew were coins, China invented the paper currency. Come 2021 and the country is again leading the race when it comes to digital currencies. What’s The Xiong’an being debated is whether branch of the China’s CBDC project have Agricultural the capability to shake the Bank of China in Hebei launched its first digital yuan-based hardware wallet pillars of American power? Well, one can argue that money has already become virtual ever since credit cards and digital payment apps such as PayPal, Google Pay, WeChat have come very close to eliminate the need for physical currency, but in its essence, those are just ways to move money electronically. What China is doing is turning the legal tender into a computer code. Cryptocurrencies such as Bitcoin, Dogecoin, and Ethereum have already shown a potential digital future for money, though they exist outside the traditional global financial realm and are yet to become the legal tender. However, China’s version of digital money will be controlled by its central bank and the same body will also issue the new electronic currency. This is expected to give the Chinese government major new tools that will help them monitor both its economy and its people. Additionally, the digital yuan will also cancel out one of bitcoin’s major drawbacks, i.e., anonymity for the user.
China is leading the digital currency race China is fairly far ahead when it comes to the testing the digital yuan and has done these tests in several regions in the past year, along with setting up a legal framework for the CBDC with the help of various global finance regulators. Xiong’an is one of the first four regions that debuted China’s CBDC. The Xiong’an branch of the Agricultural Bank of China in Hebei launched its first digital yuan-based hardware wallet which was developed by the Party Working Committee of the Xiong’an New Area and the PBoC’s branch in Shijiazhuang in February 2021. Recently, China took a major step in its central bank digital currency (CBDC) tests by debuting blockchain-enabled salary payments with digital yuan at Xiong’an.
One might ask why there is so much excitement surrounding the Chinese digital yuan? Well, it’s primarily because tokenised money is completely controlled, similar to physical cash. People might use an ATM to draw the amount of money needed from our accounts, but as soon as we do, the bank
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owes us less and the state owes us more. Similarly, digital cash has been conceptualised the same way. When we transfer money from our savings account to the digital wallet, the commercial bank steps out of the picture and the central bank takes in the role. Tokenised money makes credit risks disappear from settlements and the transactions remain primarily anonymous unless the concerned authority wants to check for money laundering. As predicted by financial experts, the digital yuan might be heading for a soft launch coinciding with the 2022 Beijing Winter Olympics.
The digital dynamism It goes without saying that China’s bold move hasn’t surprised anyone, especially after it has positioned itself in the market as a nearly cashless society. Back in 2000, there were around 23 million internet users in the country and that number quickly rose up to 900 million in 2020. It is safe to assume that most of the users consume technology primarily with the help of a mobile phone. As a result of this technical boom, China developed a comparable physical communication infrastructure. This directly resulted in China’s hugely successful e-commerce and online-to-offline platforms, which brought together the two major digital players of the field- Alipay and Tenpay, that developed the WeChat pay service. WeChat pay service allowed an almost hassle-free shopping experience that included everyday transactions like accessing public transport.
Ever since the need for digital payments has gained momentum, central banks from all over the world started exploring digital currencies. At present, they are being studied by 85 percent of Central Banks. In October, the Bank for International Settlements (BIS) released a report, along with seven other central banks like the European Central Bank, the Bank of England, the US Federal Reserve and the Bank of Japan, where they assessed the feasibility of CBDCs. The report also focused on how digital currencies can co-exist along with cash and other forms of payments and what steps need to be taken so that no harm comes to financial stability.
Other points that the report focused on how to improve financial stability, innovation, and efficiency. Other smaller nations like Sweden and Thailand are staging their own digital currency trials, and the Bahamas have already launched its first digital currency. As the world becomes more digital and
CHINESE ECONOMY CHINESE DIGITAL MONEY
commercial transactions shift even more to digital platforms, Digital Currency Electronic Payment (DCEP) potential will continue to increase. At present, the Chinese currency accounts for about 4 percent of global transactions and DCEP definitely has the potential to further innovate the domestic and global commerce for Chinese companies. Additionally, it could also provide safeguards against fraudulent transactions.
CBDC and its impact on China’s business landscape In recent years, China has moved rapidly in its efforts to become a cashless economy. Thanks to online payment platforms like Alibaba’s Alipay and WeChat Pay which are essentially digital wallets. China’s new digital currency is expected to be a tool that the Chinese authorities can keep a track of the technology companies that operate mobile payment platforms. The People’s Bank of China will issue the digital currency to commercial banks, which will then provide DCEP to individuals.
If the Chinese government is able to popularise the use of DCEP, it stands to gain a lot of economic and political benefits. DCEP can also help boost the internationalisation of the renminbi, which is a key longterm goal of China’s leaders. From what we know, Beijing’s plan is that DCEP would eventually replace physical money significantly, which, in turn, will reduce the cost of securing and maintaining physical cash supplies, as it could free up 0.5 percent of China’s GDP. DCEP is expected to work without the need for a bank account or the internet.
This might bring in new sources of economic growth and opportunities for greater financial inclusion. Till 2017, 20 percent of Chinese adults did not own a bank account, something which is required to access many institutional financial services and to use mobile payment platforms. DCEP can open up new opportunities for borrowing, saving, and investing services to individuals who don’t have an account. Additionally, DCEP is expected to attract new users in China’s e-commerce market. In 2020, standing at $21.1 trillion, the Chinese e-commerce market is estimated to be the largest in the world, which is more than twice the size of North America’s combined e-commerce market and more than three times the size of Europe’s.
Can the digital yuan compete with the US dollar? According to financial experts, China’s move to a digital currency, focusing on blockchain technology is intended to displace the dollar at some point. At present, 88 percent of the global trade interactions are done in US dollars, followed by the Euro the Japanese yen, the British pound sterling, the Canadian dollar, the Australian dollar, and the Swiss franc. Only about four percent of the global trade currency uses Chinese currency as a medium of exchange.
Therefore, it is natural for some analysts to argue that the CBDC has no chance to compete with the American dollar as the data clearly shows that the world lacks
Digital money growth
2013 0 2014 35 2015 102 2016 153 2017 200 2018 272
Mobile payment transaction volume (in Trillion RMB)
Source- CKGSB
confidence in the yuan. In order to solve this problem, it looks like China is forging ahead in the direction of implementing digital currency as a major token in order to displace the dollar. Given that China is one of the largest economies in the world, this move will definitely have some implications for the US economy.
Back in 1994, the US currency was made to be the reserve currency for global trade. Ever since the currency has dominated the market as it is relatively stable and easily transferable. One of the primary outcomes of this decision was that the US now could monitor financial transactions and penalise entities that violated global democratic norms. These transactions are monitored through the Society for Worldwide Interbank Financial Telecommunications (SWIFT) in Belgium. It is a messaging platform that keeps an eye on electronic
payments between international banks. After the 9/11 attacks, the US has used these sanctions to restrict individuals, companies, or countries from funding terrorists as well as violating human rights norms.
It is a known fact that digital currencies allow direct money transfers between global banks that could theoretically bypass the SWIFT monitoring system and have backing by central banks. An alternative governmentbacked currency that is directly transferable would allow countries that are sanctioned by the US to buy and sell with China.
The Chinese government is particularly interested in bypassing the SWIFT monitoring system because the list of Chinese politicians, individuals, and companies on the US sanctions list continues to increase. Similarly, China has also sanctioned a large number of US politicians. But since the US dollar is still the global currency for trade, US sanctions are far more consequential than China’s sanctions.
The evolving landscape The popularity and the demand for virtual currencies is increasing in different sectors, along with crypto and private digital currencies, along with DCEP. The digital yuan already has the legitimacy of a legal tender and the payments made while using it is different from the ones people do use Alipay or WeChat. The services provided by the latter may settle transactions very quickly for customers, but behind the scenes are ledgers of large numbers of transactions between the banks of the buyers that are originally settled hours or even days later.
The digital yuan neutralises the need for these banks, Additionally, there is no need for paying a service fee and in theory, the speed of payments can be even faster. When compared to cryptocurrencies like Bitcoin and the likes, the CBDC is backed by the government, which means its issuing is the same as the issuance of cash in circulation, making it just as secure. It will also give the government a much better grip over the money supply and officials can see all the transactions taking place at any given time.
Finally, it seems likely that in China, many companies will soon start running in an environment where a large number of transactions will be done using the CBDC. It is important for business leaders to keep an eye out to see how these Chinese pilots evolve and how they are adjusting to the adoption of digital currency. Analysts predict that if all goes well, there is a solid chance that over time, the number of individual transactions through DCEP will soon surpass the B2B usage.
While there is no denying this the digital yuan still has a long way to go, but its path seems to be clear as of now. In 2021, China will test digital money among the mass and 2022 could very well mark the digital unveiling of its progress, hopefully at the Beijing Olympic, 2022. Reports suggest that global athletes and event attendees will be using the digital yuan and as the prized Olympians of our world will strive towards winning that coveted gold medal, there might be a bigger global economic prize waiting in full display, for the first time in history.
editor@ifinancemag.com
TECHNOLOGY FEATURE HEALTHCARE AI HEALTHCARE HEALTHCARE TECHNOLOGY
AI is transforming the healthcare industry
Global market size for artificial intelligence in healthcare 2016 $1098 million 2017 $1426 million 2025 $28046 million (f)
f= Forecast Source: Statista Market Size
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PRITAM BORDOLOI
Artificial intelligence (AI) is the tech of the future and is leading to remarkable developments in many sectors, be it Tesla’s autonomous vehicles or IBM Watson, moving AI from theory to commercial applications. AI has come a long way since it was first established as a field in 1956, and AI in healthcare has the potential to transform the industry and the change is already underway. Accenture said that growth in the AI healthcare market is expected to reach $6.6 billion by 2021. Similarly, according to a recent report "Artificial Intelligence (AI) in Healthcare Market 20202026", the global market for AI in healthcare is projected to have a CAGR of around 51.5 percent during the mentioned period.
The Covid-19 pandemic has also expedited the use of AI in the healthcare sector. An increased emphasis is now being given to the use of modern technologies such as the use of brain-computer interfaces (BCIs), arterial spin labeling (ASL) imaging, biomarkers and natural language processing (NLP). Healthcare organisations across continents are ramping up the use of technology in healthcare and AI is at the forefront. It enables analysing complex medical data by utilising software and algorithms and achieve results.
Since the pandemic, we have seen that many healthcare startups, digital healthcare service providers
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and even universities are emphasising AI and collaborating for its integration in the healthcare industry. Demand for healthcare is increasing every year and we are noticing emerging trends of manpower shortages. AI can solve this problem. The advancement of technologies in other fields especially in telecommunication is also significant. Since the pandemic, telehealth as a sector has boomed. In the near future, AI could deliver healthcare services through a mobile phone.
Role of AI in healthcare
Today, there are numerous applications of AI in the market when it comes to healthcare. But the primary role of AI in healthcare is to increase efficiency, to help deliver healthcare services in a much better way and to help save lives. AI helps perform sophisticated and complex task at a much faster pace, in an efficient manner and at lower cost. It is changing how we deliver healthcare. From chronic diseases, cancer to radiology and risk assessment, AI helps healthcare workers or medical practitioners better understand the day-to-day patterns and needs of their patients. AI can help study complex medical data in an efficient manner and this allows the medical practitioners to provide their services in a much better way, offer solid feedback as well as guidance and support.
PwC mentioned in a report that AI is already being used to detect diseases, such as cancer, more accurately in their early stages. According to the American Cancer Society, a high proportion of mammograms yield false results, leading to 1 in 2 healthy women being told they have cancer. The use of AI is enabling the review and translation of mammograms 30 times faster with 99
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Revenue from AI systems in healthcare worldwide 2013 $507 million 2014 $633.8 million 2015 $811.1 million 2016 $1065.1 million 2017 $1438.4 million 2018 $2002.7 million 2019 $2882 million 2020 $4298.2 million 2021 $8882.2 million
percent accuracy, reducing the need for unnecessary biopsies.
At present, algorithms do a far better job than radiologists at detecting malignant tumours in patients. According to PwC, AI can help clinicians take a more comprehensive approach for disease management, better coordinate care plans and help patients to better manage and comply with their longterm treatment programmes. AI is also used for minimising errors and control disease progression.
We are living in the age of information and data is vital. Tech giants such as Google or social media giants such as Facebook use advanced AI to collect and store consumer data. Similarly, healthcare data is also crucial. In the age of digitalisation, electronic health record (EHR) developers are now using AI to create more intuitive interfaces to store health records. These interfaces present medical records of the patient, from various providers, test labs, imagining labs, pharmacies in real-time which can be used by the patient’s doctor as per requirement. A sophisticated AI-based EHR software can also draw conclusive analysis, identify risks, evaluate health conditions and even auto-book you an appointment.
Mads Jarner Brevadt, CEO and cofounder of Radiobotics told International Finance, ” We have only touched the tip of the iceberg in terms of the impact AI has brought to healthcare.” His startup uses AI to help 3 main groups of clinicians - Radiologists, Orthopaedic Surgeons and Emergency Care staff.
AI is becoming more and more common within healthcare and leveling up in terms of its ability with each year that passes. AI is being used to make the administrative side of healthcare more efficient and intelligent. “This has both saved money and had an impact on hospitals' waiting times. Yet, the impact AI can bring towards clinical healthcare delivery, enabling us to diagnose and treat at a pace and of a quality that would have been unthinkable just a few years ago. As AI is built using data, it truly allows us to live up to the ideals of evidence-based medicine that we have long preached about,” he added.
Implementing AI in healthcare, what are the hurdles?
Even though we are at a primitive stage of AI development, it has been fastpaced. As we move ahead and break AI barriers, the question of AI singularity will get asked more often. Singularity by definition is a hypothetical point in time at which technological growth becomes uncontrollable and irreversible. In short, does it mean AI will replace humans? While we may not have a definite answer to that question, there are chances that we may not hit singularity at all.
When it comes to AI in healthcare, there are a few challenges that the industry needs to overcome to make AI more mainstream in healthcare. The biggest concern that arises at this point in time is privacy. Data privacy is a growing concern in the modern-day and for AI to be efficient, it needs to collect a lot of data. So, amid privacy concerns, how willing will a patient be to share his or her medical data? Also, for years, many have raised concerns about the ethical implications of data storage and data security.
Along with privacy, there is also the issue of regulation. While regulations differ from jurisdiction to jurisdiction, regulations related to the use of AI are not clear or strong enough. Recently, the European Union (EU) introduced its ‘Proposal for a Regulation on a
TECHNOLOGY FEATURE HEALTHCARE AI HEALTHCARE HEALTHCARE TECHNOLOGY
European approach for Artificial Intelligence,’ which stresses on the importance and creation of the first-ever legal framework on AI.
Another very important challenge that needs to be addressed is the black box problem. AI interprets the data available and offers a conclusion, however, we may not know how AI reached that conclusion. While addressing the needs of his patients, a doctor should be able to understand and explain to his patients why a certain procedure that was recommended by an algorithm will help them overcome their medical issues. Understanding how the AI algorithm works is key.
From an industry point of view, Mads said, “I think the answer to this question is two-folded. On the production side, access to data is a barrier we need to overcome. Data is truly the lifeblood of innovation in AI and the bedrock on which all technology is built upon. We will only unleash the true potential of AI when we have access to high-quality data with which we can have the bestperforming AI. This will ultimately benefit us all as citizens and patients.
“The other challenge which I see is the change readiness of healthcare staff. We expect a lot from this group of people who are often overworked and suffer from burnout. Investment in change always has a human capital investment alongside to make sure the change realises its maximum benefit. As healthcare systems, we need to give these staff allocated time in which to invest in change programs, both from when we are providing our healthcare staff their education and when they are practising clinically.”
How AI is fighting Covid-19?
Given the highly infectious nature of the Covid-19 virus, AI can help reduce transmissions by reducing human contact. AI is not only playing a crucial role in protecting frontline healthcare workers, but it is also helping to identify high-risk patients at an earlier stage. Today, we are witnessing multiple AIpowered projects with technologies such as machine learning and big data being constantly used across a broad range of fields to manage the different scenarios caused by the pandemic. Interestingly, a team of leading scientists at the University of Liverpool, UK, has used machine learning to predict where the next novel coronavirus could emerge. According to them, this could help them predict or even prevent a future pandemic. AI is also being used extensively by healthcare workers to predict the transmission rate as well as track the spread of the virus across the globe.
In Singapore, amid a manpower crisis, NCS helped deploy AIpowered thermal cameras to carry out manual, one-to-one temperature measurements with handheld scanners. This drastically reduced the need for manpower. Similarly, NCS also coimplemented the Robotic Process Automation (RPA) solution to automate the admission, discharge and transfer of patients in and out of the Community Care Facility (CCF), again solving the problem of manpower crisis. In France, startup Clevy is using augmented assistance to help diagnose Covid-19 symptoms without having to leave the comfort of their premises.
MIT-IBM Watson AI lab is involved in multiple projects to help fight the spread of the Covid-19 pandemic.
One of these projects includes identifying sepsis in Covid-19 patients as it can prove to be life-threatening.
This can be done by analysing white blood cells (WBC) of Covid-19 patients by using machine learning. This early diagnosis will offer doctors valuable time while treating the patients.
Tech giants such as Google, Microsoft and Apple are also involved in initiatives including contact tracing, drug development, remote communications between patients and clinicians among others. AI also played a big role in the development of Covid-19 vaccines as well. MIT’s website says a machine learning model developed jointly by Janssen and MIT data scientists played a key role in the clinical trial process for the Johnson & Johnson Covid-19 vaccine.
One thing is very clear. The pandemic in many ways has been a teleporter to the future. Many of the barriers which were long-standing in healthcare preventing large-scale digital transformation
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began to be reduced as the world came to terms with the crisis that we faced. “This increased the appetite for digital innovation in general and accelerated progress in AI in healthcare to a large extent,” Mads said.
“We are now facing another crisis in healthcare, that is how to treat all of the patients whose conditions have not been treated during the pandemic. I think this is another crisis where AI can help to equip clinicians with the tools to treat these patients more effectively. This is another opportunity for AI in healthcare to shine and once again prove that this is not only an area of ‘hype’ but can deliver real tangible impact,” he added.
The future of AI in healthcare
AI indeed has an important role to play which will define how we deliver healthcare services in the future. Currently, we see that the potential of AI is growing exponentially. Mads said, “This is great news for all industries but I think healthcare is uniquely positioned to feel the positive impact that AI can have. If you look at where Radiobotics helps most, Radiology departments, we are seeing right now a drastic imbalance between the number of Radiologists available to report, and the number of reports in which to be completed.
“This of course has a negative impact on our Radiologists as well as patients. AI tools deployed in this environment can help correct for this imbalance and ultimately increase patient outcomes. In the next five years, I would love to see AI deployed and doing repetitive rulebased tasks for which it is best at, and clinicians gifted with more time to treat our patients. Looking even further into the future, I would like AI to be deployed to increase preventative medicine, so figuring out how we best keep patients well rather than treating them when they are sick. “
While it is without doubt, we can claim that AI will achieve great heights when it comes to healthcare, the greatest challenge for the industry is to ensure AI can be successfully integrated to deliver sophisticated healthcare services and at scale. For widespread adoption to take place, the challenges such as privacy, regulation and data collection must be addressed.
With regard to AI technology making humans obsolete, we can be quite confident that it won’t happen. Reality is over time; human efforts will still be required to deliver top class healthcare services but not at the same capacity. Moreover, human interaction with regard to healthcare would shift to delivering more human skills such as empathy, persuasion and big-picture integration.
As a global community, the sheer number of patients who require support is increasing year on year. “We do not have the manpower to deliver this care that is required. We are fortunate that the amount of medical innovation that is coming to the market each year is helping to address this shortfall. I am confident that this level of medical innovation is not slowly down any time soon, that we can meet the healthcare challenges of tomorrow and the future is bright for the healthcare sector,” Mads added.
So far, AI-powered solutions have only taken small steps in the healthcare industry. For AI to have a largescale impact on the global healthcare industry, we will have to wait for a couple of more years.
