China’s Digital Currency to Boost Renminbi Against the Dollar

Asia Blockchain Review
October 31, 2019
China’s Digital Currency to Boost Renminbi Against the Dollar

Over the past year, reports of China’s Central Bank Digital Currency (CBDC) have emerged, with many speculating that the rise of Facebook’s Libra has prompted a renewed sense of urgency for the country to issue its own digital currency and protect its monetary sovereignty.

However, with the issuance of the CBDC, China’s fiat currency the Renminbi, colloquially known as the Chinese yuan, is also expected to become stronger against the U.S. dollar, as the Chinese government has been introducing initiatives to increase the use of the RMB in international communities.

Promoting the Yuan Through Overseas Projects

According to a report by Ledger Insights, a publication by the Asian Development Bank has stated that China has been aiming to “internationalize the RMB for longer than its leading trade status,” with pilot projects in Southeast Asia to use its currency to settle trades.

This strategy has seen some success: in 2010, only 1% of China’s international trade was settled in RMB, while 2014 saw the number increase drastically to 27.8%.

China’s loans to other countries also accounted for a boost in the use of RMB. A SWIFT report in June 2019 stating that in Africa, payments using the RMB increased by a whopping 123% over three years.

Introducing China’s Digital Currency

If China’s CBDC becomes internationally accessible, it may turn into tool for the Chinese currency to gain strength against the U.S. dollar. 

China has been making preparations for its digital currency launch. In 2018, Alipay, one of the speculated distributors of the CBDC, made the transformation to using UnionPay — a settlement company with close connections to the central bank of China for barcode payment clearing. 

However, it remains to be seen what the actual impact on China’s fiat currency will be, once the digital currency enters circulation in the near future.

Source: https://www.ledgerinsights.com


About Asia Blockchain Review

Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. It aims to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

Our goal is to cultivate and encourage a collaborative community for our members to gather, share their experiences and endeavors in the blockchain space, and brainstorm the potential uses of blockchain technology.

Follow Asia Blockchain Review on:

    Related Article
    Expert Insights On The Asian Crypto Market
    Trescon hosted its first virtual edition of the popular World Blockchain Summit (WBS) series on Thur...

    August 11, 2020

    Digix Partners with Axie Infinity In Gaming
    The world’s first asset-backed digital gold token, Digix has partnered with Axie Infinity on a digit...

    August 11, 2020

    Distributed Ledger in Education: UCSI Explores
    Asia Blockchain Review had the opportunity to chat with the director of ICSDI at UCSI on the whole d...

    August 11, 2020

    Mainstreaming Of Cryptocurrency Investments? An Exploration
    While the security and the regulation is well chronicled. The big question that needs to be answered...

    August 10, 2020

    We provide information about Asia Blockchain Review latest activities as well as global blockchain news and research. Subscribe to our Newsletter now or Contact us