China is a global leader in the development of the central bank’s digital currency (CBDC). The digital yuan has already been tested in some regions of China while western nations have just started talking about CBDCs.
Six central banks, including the ECB, the Bank of England and the Bank of Japan, are working on the CBDC investigation and are reported to have held the first meeting in April. The Bank of Japan announced earlier this month that it would begin testing a digital yen, but did not specify when. The United States has not even officially started talking about it. Last month, Fed chairman Jerome Powell made no concrete progress on the digital dollar.
So nothing seems to be stopping the development of the Chinese digital yuan.
Takaya Nakamura, a manager on the Fisco Japanese Stock Exchange is firmly convinced that the digital yuan will not prevail due to the “Chinese dream”..
China’s dream It is a political slogan that President Xi Jinping unveiled in 2012. It is a nationalist slogan with the goal of realizing the Chinese dream of rejuvenating the Chinese nation.
Nakamura spoke to Cointelegraph about it China’s dream would hamper the mass adoption of the digital yuan.
“I don’t think the digital yuan will prevail,” he said.
As China, the “factory of the world,” withdraws from the world’s supply chains due to the economic slowdown due to the COVID-19 pandemic and the US coup, The Chinese will further strengthen China’s dream of fueling patriotism and overcoming the crisis. According to Nakamura, this will further isolate China from the global economy.
“”The Chinese Communist Party (CCP) must continue to emphasize China’s dream, otherwise it will not be able to maintain its unifying power and will collapse. But if they do too much, they will continue to isolate themselves in the world and lose their economic competitiveness. “This is a downward spiral.”
According to Nakamura, China will lose currency reserves if it moves away from world trade networks. Sufficient foreign exchange reserves will be crucial as China needs a transition period for the digital yuan to break the dollar hegemony..
“”As long as you live in the age of US dollar hegemony, it is very important to have foreign exchange reserves. If they are lost, China will ultimately find it difficult to advance the digital yuan. “
Nakamura comes to the conclusion China will only have a chance if the US mishandles the situation and does nothing during the transition from China to the digital yuan..
Do not stop reading: