The world engages in a financial war and China wins. The Chinese digital yuan – also known as electronic payment in digital currency or DCEP – will soon be used around the world. The People’s Bank of China is one of the most advanced central banks in the world. For this reason, it has made progress on the digital currency front, while the US Federal Reserve obviously has not.
And now that Donald Trump and his “America First” policy have been defeated – although the tally is still pending and legal proceedings are pending over the results – China’s supremacy in digital currency has been assured.
Joe Biden has not set a clear technology policy, let alone a digital currency policy. This will give China the opportunity to increase its lead in the digital currency race. Maintaining America’s position as a global superpower doesn’t appear anywhere on Biden’s agenda. In 2015, as vice president, Biden toasted China:
“To the hope and expectation that in 50 years our great-grandchildren will look back and tell the great story we have written together.
In 1979, Biden went to China as a junior senator after President Richard Nixon normalized relations between the United States and China. During his visit to Sichuan University as Vice President of Barack Obama in 2011, he mentioned:
“I believed in 1979 and said it and now believe that a rising China is a positive development, not only for the Chinese people, but for the United States and the world as a whole. A booming China will fuel economic growth and prosperity, and bring to the fore a new partner with whom we can jointly meet global challenges. “
In the meantime, China is moving forward by rolling out the world’s first digital currency.
Related: Digital Cold War? US, China vying for blockchain supremacy
According to the announcements, Biden and Kamala Harris’ administration is focusing on the coronavirus, racial equality and climate change. In its foreign policy and American leadership plan, dubbed “America’s Power Example: The Biden Plan to Lead the Democratic World to Meet the Challenges of the 21st Century,” the word “digital” does not appear. just once. Additionally, Biden has long-standing ties with China and has long been a supporter of its industrialization and growth into a global leader. Asked by a reporter for National Public Radio if he would maintain Trump’s tariffs on China, Biden retaliated with a resounding “no”.
The Chinese yuan via the DCEP will become the dominant world currency. The DCEP will not only be successful because of the forward-thinking PBoC, but also because more than 12 million Chinese live outside of China – in fact, 2.5 million live in the United States. They could adopt digital currency and spread the yuan around the world.
With their help, the Chinese yuan can become an international currency. If the Chinese yuan is used by such individuals across the world, the Chinese currency can overcome US monetary sovereignty.
Related: Central bank digital currencies are dead in the water
The current situation was made possible by the COVID-19 pandemic, which has increased reliance on digital services. As tensions soar in the United States, China could siphon off global influence. Although the Federal Reserve has experimented with distributed ledger platforms to understand their potential advantages and tradeoffs, it apparently has not made a definitive decision to adopt such a currency.
Related: China and US must learn from each other and collaborate on CBDC
Jerome Powell, Chairman of the Federal Reserve, said the US government was not particularly concerned with speed when it came to developing a central bank digital currency. Anthony Pompliano, co-founder of Morgan Creek Digital, sounded the alarm bells on this misguided approach.
Powell explained the slow efforts of the United States:
“We have not made the decision to issue a CBDC, and we believe there is still a lot of work to be done.”
Powell suggested that building a CBDC correctly was more important than winning the digital currency race. In the meantime, China is moving forward. Pompliano sees this as an existential threat to the US dollar. “They’re talking, like, maybe we’ll build one in the next couple of years,” Pompliano said of Powell’s recent comments on CBDCs. “It’s not a thing for the next two years.” He added:
“It’s a hot thing, and if they don’t take action, the United States is going way behind China because it all comes down to accessibility.”
Pompliano said accessibility to digital fiat currency will determine the winner on this new frontier of fintech. “If I’m sitting somewhere in the world and can use the Internet connection and want a world currency, can I get one yuan or can I get the dollar?”
Pomp is right. The relevance of the US dollar is at stake. But the time is late – perhaps too late.
The views, thoughts and opinions expressed herein are the sole ones of the author and do not necessarily reflect or represent the views and opinions of TBEN.
Alex zha is Director of Global Operations at MXC Exchange, a one-stop-shop cryptocurrency service provider. Prior to MXC, he gained experience at OKEx as Senior Director of Global Marketing. Alex is a veteran of the cryptocurrency and blockchain industry and is a seasoned marketing and operations specialist who believes blockchain and cryptocurrency will usher in the era of modern financial inclusion. He holds an MA from the National University of Singapore.