The United States cannot afford to let China steal a march on digital currency adoption if it wants the US dollar to retain its status as the world’s reserve currency, according to the White House’s National Security Council former senior director for counterproliferation and biodefense.
Writing for political website Foreign Policy, Tim Morrison states that China’s desire to put itself at the forefront of this new wave of financial technology “should be alarming” and calls for a “digital makeover” of the greenback before it is too late.
China Pushes On
Chinese president Xi Jinping made waves in October last year when he announced that the country should “seize the opportunity” blockchain represented to revolutionize many aspects of industry, commerce, and finance over the following decades.
In contrast, the US has been, in the words of the Securities and Exchange commissioner Hester Pierce, “heel dragging” over regulating the burgeoning space, with blockchain startups often hampered by unclear guidelines and retrospective fines. This has allowed countries like China to overtake them in terms of getting frameworks in place and pushing ahead with the technology.
Just like we cannot let the CCP build the world’s telecommunications networks, we cannot let the CCP build the digital currency of the future either. We need all hands on deck to ensure American cryptocurrencies become the global standard. https://t.co/6XLaKVg3yK
— Rep. Mike Gallagher (@RepGallagher) January 24, 2020
US Risks Losing Financial Muscle
Morrison’s main concern with China’s plans to increase its use of digital currencies is their intention of “finding ways to avoid the dollar”, for example if the US were to apply sanctions at a future point in time. The use of cryptocurrencies to avoid sanctions has already been seen in countries like North Korea and Cuba, and Morrison warns that the creation of a national digital coin in the country could result in China “setting up a parallel network that needn’t rely on the dollar.
No Easy Fixes
Morrison doesn’t offer any solutions to the problems posed by national cryptocurrencies, although he does note that China is not the only country looking into digital currencies and “how they will position themselves for the post-dollar world.” With cryptocurrencies currently viewed with suspicion at the very least by those who have even heard of them, there is a real risk of the US being left behind in decades to come and losing the financial clout it has held for some time.