Financial consultant and author of Cashless: China’s Digital Currency Revolution, Richard Turrin, said the digital yuan will “challenge” the US dollar in international settlements over the next decade.
In an interview with CNBC, Richard Turrin said that China is successfully implementing the People’s Bank of China (PBOC) digital currency initiative and is already well ahead of other countries. According to Turrin, in the next ten years, the digital yuan may become the preferred tool for international trade transactions. Given that China is considered the largest “trading empire”, the digital yuan could gradually replace the US dollar when buying goods from China, Turrin suggested. China is seeking to develop an alternative payment system to reduce its reliance on the dollar, and other countries will seek to do the same.
“The creation of the digital yuan and other central bank digital currencies is a risk management exercise. It aims to gradually reduce total dependence on the US dollar by at least 80%,” Turrin said.
Comparing the development of the digital yuan and the digital dollar, Turin said it would take at least another five years for the US to stop testing and launching a government stablecoin. Indeed, the NBK has been working on its own digital currency since 2014, while the US Federal Reserve (Fed) has not yet made a decision to launch a digital dollar. However, recently President Joe Biden instructed federal agencies to study the possibilities for the development of the cryptocurrency industry, develop rules for its regulation, and also study the risks of introducing a digital dollar.
A few days ago, US senators introduced a bill aimed at limiting the use of the digital yuan in cross-border payments. Senators fear that countries under US sanctions will be able to bypass them with the digital yuan. However, Turrin is not sure that China’s state-owned cryptocurrency is mature enough for this, and on a technical level, it will be difficult to use it to circumvent sanctions.
“The digital yuan is still a baby in this sense. It is at the testing stage, its full-scale launch within the country has not yet taken place. The digital yuan has not been tested internationally. It is likely that Beijing will want to protect its “newborn” from the “political dirt” that will prevent the digital yuan from gaining wide acceptance,” Turrin explained.
Last week, the president of the NBK branch in Nanjing, Guo Xinming, proposed recognizing the digital yuan as a means of payment and amending the law accordingly.
Source: Bits
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