Skip to content

An expert says the digital yuan poses no threat to the hegemony of the dollar

August 28, 2020

It was Prasad, That is what the professor of trade policy at Cornell University and a senior fellow at the Brookings Institution believes While China’s digital yuan will strengthen the renminbi’s role as an international currency of payment, it will “barely affect” the US dollar’s dominant status.

In an opinion piece posted on Project Syndicate, Prasad states that The Chinese government should continue to reform the country’s financial markets and lift restrictions on capital inflows so much to say to the CBD of China and its national cross-border payment system worldwide to increase its adoption.

According to the professor The renminbi has made significant strides in recent years, both as a means of payment and as a reserve currency. He says this is mainly due to the cost of currencies like the euro and the British pound:

“Even when the IMF added the renminbi to the four existing currencies in the SDR basket and gave it a weight of 10.9%, it was mainly the euro, pound and Japanese yen that fell, not the dollar.”

An expert says the digital yuan poses no threat to the hegemony of the dollarAn expert says the digital yuan poses no threat to the hegemony of the dollar

The People’s Bank of China “still manages the renminbi exchange rate”. said Prasad, who also added that This policy is unlikely to change “significantly in the short term”.

However, the professor made it clear that, as in other developing countries, there are close economic and financial ties with China. “They could start settling and settling their transactions directly” in local currency and could easily adopt the digital yuan when it is officially introduced.

China’s Ministry of Commerce announced On August 14, testing of the country’s central bank’s digital currency will be expanded to Beijing, Tianjin and Hebei provinces.

Receive Breaking News !

Install
×
Enable Notifications    Ok No thanks