PBOC: Digital Yuan Will Reduce Dollar Dependence

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  • The People’s Bank of China has stated that it needs to “seize the first track” in CBDC development
  • An article in China Finance describes the digital financial revolution as a “new battlefield”
  • The PBOC sees a digital yuan as a way to reduce dependence on the existing dollar-dominated system.

The People’s Bank of China (PBOC) has stated publicly that it needs to lead the way in the issuance of a Central Bank Digital Currency (CBDC) in order to reduce dependence on the global dollar payment system. Reuters reports that in an article published in China Finance, a magazine operated by the PBOC, the bank says that sovereign digital currencies would form part of a “new battlefield” between nations, marking the first time such language has been used by officials.

PBOC Pushes Digital Yuan Development

China and the PBOC has made noises pertaining to a CBDC as far back as 2016 but really pushed ahead last year following the release of Facebook’s Libra whitepaper. Since then they have made huge strides in development of a digital yuan, even testing the platform in April, suggesting that a full launch may not be too far away.

In the article the PBOC says that China has “many advantages and opportunities in issuing fiat digital currencies” and that as a result “it should accelerate the pace to seize the first track.” This stated aim will cause further ructions in the U.S., where concerns have been raised in various quarters over what Chinese domination of a digital financial world would mean.

“Alarming” Ambitions Coming True

Ripple co-founder Chris Larsen warned last month that that the U.S is “fighting an economic and technological cold war against China” which will have ramifications for generations to come. Similarly, the White House’s National Security Council former senior director for counterproliferation and biodefense Tim Morrison warned in January that China’s ambitions to put itself at the forefront of the digital financial revolution was “alarming”.

In admitting for the first time that it sees a CBDC as a way of overhauling U.S. financial dominance, the PBOC has certainly fired the first shots in the battle, and America’s slow response could be fatal.