US is worried about the digital yuan currency according to an anonymous source cited in Bloomberg.
There is a lot of movement in the market at the moment and it is leaving people clueless on what to think or what to do. The financial market is in need of a new direction and several countries have prepared new proof of concepts for the future of money.
Digital money is the money of the future, many people seem to agree on that topic. But what happens if paper money no longer exist? How will the future be if the worlds reserve currency would be a digital asset as well? And will this have any influence or impact on the possibilities or restrictions that money may have when its digital.
China is very close to the introduction of the Digital Yuan but America seems to be wary of the role of the Digital Yuan. For the past few decades, the world reserve currency was USD meaning that most of the money that was moving in the world was based on the USD currency. This will very likely change in the near future now that the USD has dropped so fast with an inflation of 21% of the total amount of USD in circulation last year.
The Whitehouse Administration is Wary of the Role of the Digital YuanBiden Administration is Wary of the Role of the Digital Yuan
Since the digital yuan is making such fast development currently the Whitehouse administration is increasingly concerned about the digital yuan and its potential to undermine US political interests, according to an anonymous source cited in Bloomberg. According to the insider in the US camp, a number of officials are wary that the launch of China’s Central Bank Digital Currency (CBDC) could pose a long-term threat to the stability of the US, and the role of the US dollar as the world’s reserve currency.
This has galvanized the Treasury, State Department, Pentagon, and National Security Council to conduct roundtable talks, to better understand what security implications the digital yuan may hold. These entities are begging to prepare their monetary defences before the ground erodes beneath their feet. The source says the digital yuan is not perceived to be an immediate threat to the entire global financial system, but it could be leveraged to breakthrough trade sanctions imposed by the US in 2020.
The speed of China’s advancement in digital currency has left much of the rest of the world playing catch up. In an interview on CBS’s ‘60 minutes’ on Sunday evening, Federal Reserve Chairman Jerome Powell confirmed that the US central bank is researching a digital currency of its own. He predicted that the road ahead may not be easy, but indicated that the Fed is making progress.
Powell told the network, “There are many subtle and difficult policy choices and design choices that you have to make,” but added, “we’re doing all that work.”
Highlighting the importance of the US dollar’s reserve status to the country he went on to say: “We are the world’s reserve currency, meaning that people use dollars even if they have no connection to the United States. They use dollars to pay for things all over the world.”
It is unclear when any digital dollar might materialize, but China’s central bank already enjoys a five-year head start on the US. The exact timeline for the launch of China’s CBDC is not yet known, the Beijing Olympic games are believed to be the CCP’s preferred deadline for a full rollout.
New money means new rules
New Money, New RulesWhile the US is concerned about the geopolitical consequences of China’s digital yuan, a number of other players have also entered the race. Among the chasing pack of nations is Sweden, who have been testing their own e-krona since 2017. In 2019 the Bahamas announced its plans to release the ‘digital sand dollar’, while the Marshall islands are working on a CBDC to be built on the Algorand blockchain. The pursuit of centralized digital currencies is also occurring in the European Union as the continent grows concerned not only of China’s CBDC but cryptocurrencies such as BTC, ETH and the high flying BNB.
The European Central Bank (ECB) is now considering its own CBDC as a response to the proliferation of both centralized and decentralized currencies around the world. The ECB will make a definitive ruling on the matter at some point later this year, but with the financial landscape evolving, and the rules of money changing, it would seem likely that Europe may also soon enter the centralized currency race – giving the Biden administration even more to think upon.
What is the Digital yuan? This video will explain it!
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