China Pushes for A Digital Currency in the East Asia Region to Dilute the Dollar’s Influence
- China's political advisor body, the Chinese People's Political Consultative Conference, were engaged in talks of a standard digital currency for the East Asian jurisdictions.
- A basket of currencies would back the digital currency with the Yuan and Yen contributing at least 80% of the backing ratios.
News has now surfaced that Chinese officials are rallying for a standard digital currency for the East Asia countries. The digital currency is to be pegged on a basket of currencies utilized by the East Asian jurisdictions.
Talks of a universal digital currency for the three countries in the region: China, Japan, and South Korea took center stage in a recent meeting by seated members of the Chinese People's Political Consultative Conference (CPPCC).
A select group of 10 members from the committee proposed the establishment of a digital currency that would be pegged on a basket of currencies including Chinese yuan, Japanese Yen, South Korean Won, and the Hong Kong dollar. This committee serves as a top political advisory body.
The ten members are a crop of influential personnel in the country comprising Mega travel company, Ctrip co-founder, and successful VC Neil Shen with an estimated $1.6 billion net worth and Hong Kong political top brass, Henry Tang amongst others. They all shared the sentiment that the endeavor is left to the private sector limiting the government's input to merely a rubber stamping role in the project.
While it is set to be backed by the four countries, the Chinese Yen and Japanese Yuan will account for the bulk of the backing ratios with 60% and 20%, respectively. This has been deduced from careful comparisons of the economic impact of the jurisdictions involved.
This will be aligned with their vision of forming an alliance amongst the countries. They would be uniquely positioned to strike free trade agreements amongst themselves, with analysts opined that it would be in the lines of a trade zone.
Notably, the proposal comes at a time when China and the US are experiencing a strain in their relations. This has been seen as an attempt to detangle and dilute the dollar's influence in the region. Other analysts believe that the abrupt push for digital currency has been brought forth by recent developments in Libra. They announced shelving their stablecoin ambitions and instead zero in on offering separate coins backed by independent fiat currencies.
China's CBDC Still Underway
China's CBDC was recently given a test run by the state-owned Agricultural Bank of China (ABC). The pilot program was rolled out in four regions accounting for the bulk of ABC's activities: Chengdu, Suzhou, Xiong'an & Shenzhen. Its support was extended to whitelisted users leveraging IOS and android tech. There is, however, no imminent launch date for the Digital Yuan.