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- China may be cunningly pushing for Bitcoins to counter the US dollar’s long-standing dominance as a reserve currency.
- China’s rapid research and operations also fuel the problem in pushing its native CBDC to the fore.
- Chinese may have also similarly used the Euro with the same goal in mind
As the Chinese dragon is looking at the world with increasingly dominating eyes, it may be the perpetrator of a covert attack on the US foreign economic policy. With the rise of blockchain technology and cryptocurrencies increasingly becoming more significant day by day, financial weapons arising out of such innovations cannot be ruled out. Peter Thiel, the co-founder of the payments giant PayPal, has warned about the potential drawbacks of such a situation.
CBDC to erode the dollar’s status
China is currently a world leader in developing a native Central bank Digital Currency (CBDC). Though several other nations, including Russia and Japan, have conducted significant research progress in this sector, the Chinese are way ahead as they’ve airdropped several million worths of CBDC to its citizens in cities, including Beijing. At an event organized by the Richard Nixon Foundation, Peter strongly cautioned against Bitcoins or CBDC being used as an economic weapon.
Currently, the dollar enjoys the status of being the global reserve currency. This puts the US at an advantage as they have a lot of cash at hand. However, with the increasingly tense geopolitical situations, this is a significant thorn in China’s ambitions to become a world power. To counter that, the Chinese are pushing for its CBDC and Bitcoins to become a form of a virtual reserve currency, too, leading to a significant undermining of the US dollar.
The dollar’s dominance has provided the US with enormous leverage over global supply chains and oil trades. China doesn’t want its renminbi to be a form of reserve currency. It would mean opening up its capital accounts, leading to greater global oversight, which it vehemently despises. Peter states that the Euro seemed like a viable alternative, and China started conducting oil trades with it to attack the dollar’s hegemony potentially; however, a lot of complications led to that plan backfiring.
Thiel tweeted that though he is an avid supporter of cryptos, it is essential to look at it from a global geopolitical perspective.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
