Future Tense
China's plan for a digital currency will have global implications
Oct 8, 2023
China's experiment with a digital currency aims to make transactions faster, cheaper, and more efficient. It could give China's currency an edge over the US, but trust, surveillance, and international appeal are crucial. The digital Yuan offers benefits like increased access to financial services and streamlined payments. Despite extensive testing, adoption of the digital currency remains low. China's high adoption of mobile payments and determination to develop a universal digital currency have implications for businesses. China's plan to replace the US dollar with a digital currency and de-dollarize its financial system is progressing through Project Enbridge, offering a more efficient transition away from the dollar.
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Quick takeaways
- China's digital currency aims to provide financial access to unbanked individuals and reduce payment delays for businesses.
- The race for digital currency dominance reflects the larger technology and geopolitical rivalry between the US and China.
Deep dives
China's Shift Towards a Digital Economy
China's financial landscape has undergone a significant transformation with the widespread adoption of digital commerce. Even beggars in big cities like Beijing now rely on smartphones and QR codes for donations, as cash becomes obsolete. The Chinese government, particularly the People's Bank of China, aims to replace the Yuan with a digital currency issued and backed by the central bank. This move can have far-reaching impacts, both domestically and internationally. While China is not the only country exploring central bank digital currencies (CBDCs), its commitment and ambitions in this area are greater than most other governments.
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