Payments: EU Fragmented, US Digital Wallets Take Off, Tokenized Cross-Border Payments Are Coming, Emerging Markets Aren't Left Out!
Also "The Future of Fintech," and China's Innovation Economy.
Artwork of the day: Deux Oiseaux (Two Birds), Georges Braque, 1961 (rotated 90 degrees to landscape format)
In Georges Braque Deux Oiseaux (Richesse de la France), 1961, the artist gracefully contrasts 2 birds adrift in a night sky. His use of rich blues and saturated blacks highlighted by white accents makes this piece quintessential Braque. This simple image is dominated by two birds stacked vertically atop one another. They seem to be flying towards the other side of the lower right wing, their wings touching ever so slightly. Three twinkling white stars surround the birds, giving us the look of this scene taking place amidst a clear night sky. The rich shades and tones of the lapis lazuli blue make this work stand out, as the colors are absolutely stunning.
Why today’s stories matter
Today's focus is on payments, a crucial topic that encompasses the future of fintech and the US and EU payment markets.
These stories are like the birds above flying through a clear night sky, guiding us through the fast-changing world of payments.
The Future of Fintech: This is an irreverent look at fintech that asks us to envision a better future while acknowledging that some things won’t changes a ’s a refreshing read.
Fragmentation in European Payments: Payments in the EU are fractured, with local digital wallets taking market share. Many will be surprised to learn that there is no EU-based pan-EU payment system until the digital euro launches.
US Consumers: Digital Wallet Use Up 32%: US consumers are voting with their payments for digital wallets. Card companies should be afraid. While Google and Apple Pay are pass-through credit card wallets for now, that won’t always be the case.
BIS Project Agora: Tokenized Cross-Border Payments: Agora shows us how to reduce wholesale cross-border payment transaction costs and is a blueprint for our future. Tokenization is going mainstream, and Agora is likely to be the model.
Mojaloop Digital Payments for Everyone: Emerging markets won’t be excluded from the digital payment revolution. Majaloop is open-source software that nations can run for free! Most importantly, nations running Majaloop gain digital sovereignty.
China’s Innovation Economy (free book): This free book outlines what sectors China is focusing its innovation efforts on and how it intends to do so. Ironically, many of its programs borrow from the US’s experience.
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China's Innovation Economy (free book)
This free book examines China's Innovation Economy and shows not only where it is today but also where it will be in ten years.
Produced by CICC investment bank in Beijing (40% state-owned), it is not an official government publication, but it is unabashedly supportive of China's current system of industrial policy where government nudges innovation.
HOW TO READ: The chapters are dense, but each starts with an abstract that summarizes the chapter. Read the abstracts!
👉My favorite chapters:
🔹 Chapter 2, Size Matters: Due to a large population and significant internal demand, innovation in China is supercharged.
🔹 Chapter 3, Digital Innovation: Chips, chips chips! Given the sanction on chip sales to China, almost the entire section is devoted to chip production! You're not surprised, are you?
🔹 Chapter 6 Smart Manufacturing: "Manufacturing and logistics are essential for innovation." How true is that? China is the undisputed champion of industrial robots and has conquered logistics. Packages from China now arrive in days in the US and EU.
Are you a fan of Shein? There's a great chapter showing how they mastered supply chains.
🔹 Chapter 7, Supporting Innovation: This chapter is about industrial policy and why it works to foster innovation in China. It also worked for the US! Silicon Valley was built with funds from DARPA and other government-sponsored research programs.
Two final thoughts:
I am often surprised at how so many media pundits are “shocked” or “amazed” when China innovates something unexpected.
Documents like this clearly lay out China’s innovation priorities, and if more read them, there would be less shock, and more strategic planning over where China is going.
Finally, if you read closely, you’ll see that many things that China is doing in the innovation scene are learned from the US. They are not from a Marxist playbook but from watching the US. From dual-use technology to national mobilization to build chips, these initiatives were learned from the US Cold War and the space race.
Thoughts?
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