This article from Forbes considers how the digital Yuan can be used to push China’s trading partners to use its technology, in an effort to replace the “US-driven global order” and displace the U.S. Dollar as the premier reserve currency. The article also imagines implementations that could be done within China, some of which have already been speculated about, such as connecting the currency and how it is used by the populace to China’s Social Credit Score.
We should note that the U.S. government has also tried to block businesses that are technically legal but unsavory by calling those industries out to prevent banks from servicing them. Here’s more from the Forbes article:
“As China integrates more closely with developing trade partners, it will attempt to impose new technological standards, including ones for digital money, upon the world in order to overcome the economic rules of the US-driven global order.
By using a form of decentralization theater and hiding behind the same sort of hiding the fundamental structure that defines the interplay between state and corporate power in China, the digital yuan in the form of DCEP may become more attractive than just a digital version of the RMB — and help more quickly accelerate the trend of elevating China’s currency into a premier reserve currency.
It’s not so clear how corporations, even if allocated as part of a node system, will be ultimately able to affect state-driven decisions. However, China’s inclination to praise blockchain while decrying cryptocurrency indicates that China’s philosophy towards its new digital currency will likely be closer to the corporate-state nexus that defines Chinese economics.
With the drive towards increasing international acceptance of Chinese currency, as well as the ability to set standards for how rich financial data is collected and used, the digital yuan is a centerpiece of China’s attempt to upend the global financial order. How other world powers respond to this attempt remains unclear. Yet, as the world steadily goes towards digital currencies, cryptocurrencies remain a user-based hedge that offers an alternative to the traditional financial order — as well as new and consolidating ones.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
