US Dollar Faces the Threat of Being Displaced by China’s Digital Currency
ECONOMY / K. Venkateshwar Rao 5 NOVEMBER 2019 From a dictation of a blanket ban on all crypto activities and digital currencies as tools for retail payments, including access to international exchange platforms in 2018, to recent declaration of the People’s Bank of China (PBOC) to launch a central bank-backed digital currency (CBDC) by November 11, 2019, China has come a long way. The logic behind the move is to “protect” its foreign exchange sovereignty, but China’s intentions of competing with the dollar came to the fore in 2015 itself when the IMF acknowledged Renminbi as a “reserve currency,” and added the RMB, to its Special Drawing Rights basket in October 2016. Tired of having its financial stability tied to the United States’ monetary system, China had many times advocated a super sovereign currency to replace the US dollar hegemony. A digital currency backed by the Chinese yuan could dampen the dominant influence of the US...