China is at the forefront of rivaling with the U.S. dollar at the backend where the actions are not hidden anymore, as per the experts.
The hearsay of the digital Yuan is acting as a catalyst to adopt digital currencies for many people including governments around the globe. However, the experts are interpreting the actions of China are entirely against the U.S dollar.
This is a fact that Bitcoin blockchain has designed to disintermediate the intermediaries and there is not a specific authority who manages the blockchain and transactions for Bitcoin. In the case of Digital Yuan, the Chinese government is trying to leapfrog the opportunity while using these new bleeding financial technologies and calling its imminent payment as DCEP.
Reportedly, China is deploying a backing of new technological advancements like Bitcoin blockchain, concepts like UTXO (Unspent Transaction Output), and digital ledger technologies on a different end and not for aiming for public blockchain like Bitcoin.
China & Digital Yuan Pointing USD
According to Matthew Graham, Chinese investment banker and CEO of Beijing-based financial services firm- Sino Global Capital, the intentions of China’s DCEP is not straight enough to agree with Peoples Bank Of China (PBOC).
On July 6, Graham while speaking to Michael Gu- founder of Boxmining, at the Unitize conference mentioned that:
China has something else on the cards to offer globally via it’s forthcoming “DCEP’ payment system (digital currency electronic payment system employed by the People’s Bank of China for the central bank digital currency (CBDC) project).
The Chinese government sees new technologies as a “leapfrog opportunity” to chip away at the dollar’s hegemony and “China’s DCEP is not about Bitcoin.”. To an extent, it’s about potentially internationalising the Renminbi. Thought, it’s difficult to internationalise.
International payment networks like SWIFT, Fedwire Funds, and CHIPS (Clearing House Interbank Payments System) are outdated, expensive, full of frictions, time-consuming, and showing their age. It’s 2020, and transactions still take three days to complete the processes. Also, these antiquated technologies are underpinning USD centric global economy. So, China has the big opportunity to grab the blue zone, said Graham.
Further, unlike Bitcoin which runs on the public blockchain without any central bank authoritative control, DCEP would be issued and managed by the Peoples Bank of China with full control like other prevailing systems of fiat currencies. Also, DCEP is entirely a hard concept to understand what it is and why it is so important.
Moreover, Matthew Gu while citing a comment from China’s International Economic Exchange Centre’s chairman mentioned that “DCEP can collect real-time data related to money creation, bookkeeping, etc, providing a useful reference for the provision of money and the implementation of monetary policies.”
Considerably, while going with the expert’s opinion with China’s DCEP, the new economic arms race has begun which is potentially trying to replace the long enjoyed U.S. dollar supremacy.