By
Tolu Ajiboye
April 17th, 2024
Despite the obvious war in the race for supremacy on the digital currency scene, industry advocates are pushing the narrative that it is pointless for the United States to compete against China’s Digital Yuan.
China’s Digital Yuan, the country’s Central Bank Digital Currency (CBDC) has been predicted to transform into a formidable competition against the United States Dollar particularly in international transactions settlements. The predictions came from Richard Turrin, a consultant and author of “Cashless: China’s Digital Currency Revolution,” who spoke in an interview with CNBC, noting that the next decade will herald a lot of power shifts.
“Remember, China is the largest trading country and you’re going to see digital yuan slowly supplant the dollar when buying things from China,” Turrin told CNBC’s “Squawk Box Asia” on Monday. “If we go about five to 10 years out, yes the digital yuan can play a significant role in reducing the dollar’s usage in international trade.”
The United States and China are known to be perpetually engaged in an economic and trade war over the past decade. However, the war has gravitated into tech, and most importantly, as it relates to both countries’ embrace of financial innovations. The duo of China and the US differ markedly with the former banning private cryptocurrencies in a sweeping crackdown last year, however, China has favored CBDC developing, coming off as the largest economy with a CBDC creation through its Digital Yuan.
The United States on the other hand has been relatively friendly to Bitcoin (BTC), and altcoins on its shores but has been a relative laggard when it comes to its proposed Digital Dollar development. One thing that is certain is that most countries have started exploring alternatives, mostly through the creation of a CBDC to reduce their 100% reliance on the USD for international transactions.
“What you’re going to see in the future is a rollback, a risk management exercise that seeks to slowly and maybe just slightly reduce the dependence on dollar, from 100% down to 80%, 85%,” Richard said.
No Sense for the US to Fight with China’s Digital Yuan for Supremacy
Despite the obvious war in the race for supremacy on the digital currency scene, industry advocates are pushing the narrative that it is pointless for the United States to compete against China’s Digital Yuan, as the Asian giant comes off as an authoritarian dictatorship that will not mind surveilling its own citizens with the Digital Yuan currency.
“It seems that a central bank digital currency would be under the total and complete control of the government,” said Jake Chervinsky, Head of Policy at crypto advocacy group the Blockchain Association. “So at all times the government would know what you are spending, where you are spending on it. They could program the central bank digital currency so they could put in restrictions and say ‘you are only allowed to spend these dollars in these certain places but not in those other places.’ They could freeze accounts or take money out of the accounts at any time.”
Chervinsky implied that the only way the US will compete with China is if it stumps out competition from private cryptocurrencies in a bid to dominate the financial landscape, a situation that will not be healthy for the country.