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- 1 The efforts of China to lead the digital currency space is quite high from recent months.
- 2 With China’s digital Yuan, the country is trying to find a solution to be a leader in CBDC’s space.
China has launched its CBDC, digital Yuan or e-CNY, as an effort to try to lead the international commerce. Meanwhile, its launch has put a question on the significance of the Dollar which dominates international commerce. But, it seems that China is unable to make the move in an efficient manner. As this concept doesn’t even work in China’s domestic economy.
However, China’s digital Yuan has created a hype over the world. It looks like the Chinese government is trying to gain dominance in international commerce through e-CNY. This move doesn’t seem to be on the side of China as its domestic transactions show another visual.
According to a recent report by Forbes, e-CNY represents “just 0.13% of cash in circulation and central bank reserves as of December 2022 (M0), and just .0005% of M2 – cash, checking deposits, and other types of deposits that are readily convertible to cash.”
However, some initiatives have already been taken by the Chinese government. Some of the local authorities are paying wages in e-CNY to make its adoption wider. Even China’s cross-border CBDC transactions process is still going on. The Cross-border transactions are more concentration-centric. As it will give China an upper hand beside other economies.
Notably, many other countries have not even launched their CBDCs, yet. So it may give China quite less competition.
China’s CBDC and USD
China’s launch of its own digital currency has raised many questions in the mind of netizens. One such question is, Does it get dominance over the U.S. Dollar? And, if it gets it then what are the steps taken by the U.S. government on it. However, looking at China’s CBDC’s condition, the country will take time to gain the dominance in international commerce.
In addition to this, U.S. government officials also said that they are not focusing on this issue. According to a report by CNBC, last year David Grider, head of digital assets at Fundstrat shared his thoughts about China’s efforts. He said that “I think that it will not change the role of the dollar in the world, which is one of the reasons that they are not focusing much on it.”
It can be ascertained that the U.S. government is not focusing much on China’s digital Yuan as the U.S. government is seeing this thing as a long-term risk and not a short-term threat. Also, it can be seen that China’s need of the hour is an integrated and coordinated system.
Notably, in the near future many other countries may launch their own CBDC’s. Or working on its pilot projects. With the adoption of CBDCs, countries will showcase their interest in the new technologies. According to the Atlantic Council, there are 11 countries that have launched their own CBDCs.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
