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The digital yuan could be just the shake up needed to democratize international commerce and dislodge the dollar from dominance

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Right now, it’s only in a limited (albeit national level) test phase but Chinese officials hope to have it fully ready by the 2022 Winter Olympics set to take place in Beijing.

Unsurprisingly, the US is taking a hard look at what exactly this might mean for the future. As RT reported this week, top US officials see the digital yuan as a potential threat to the dollar’s status as the world’s reserve currency and think it could help China and other countries bypass US sanctions. They are even reportedly considering a digital dollar to compete with it.

For starters, the digital yuan is not like other cryptocurrencies that, as of now, essentially function as highly volatile digital assets. The basic principles of cryptography are the same, but the digital yuan is just like the normal one for all intents and purposes. It’s run by the country’s central bank and circulates alongside bills and coins. Whenever a digital yuan is created it essentially cancels out a physical one.

What it really represents, at its core, is another step in the internationalization of the yuan. And why this is so important has to do with the makeup of the current status quo.

About 90% of foreign-exchange transactions involve dollars, over 60% of all global........

© RT.com

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