in ,

Against the backdrop of the coronavirus pandemic, a new currency appears – cyber CNY

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

US President Donald Trump has already stated the need to lay all the blame and responsibility for spreading the coronavirus to China. The possibility of making multi-billion claims was voiced. Politicians on behalf of the head of the White House are exploring the possibility of introducing new duties and sanctions against Beijing.

While all countries are suffering huge losses from the COVID-19, China has already coped with the virus and is beginning to actively restore its national economy. Trump believes this is wrong. It is unfair when someone but not America gains prophit. China does not agree with the American arguments. But it’s strategy is not built in the area of political accusations.

The moment of the world global economic crisis is used to start testing the national crypto currency. The ultimate goal is a complete departure from the dollar in international payments and strengthening of the yuan. With the success of this project, China will be able to get rid of the dependence of the dollar economy.

In recent years, China has played a significant role in the global economy. It would seem that this should be followed by the introduction of the CNY into the system of international payments. But as of 2019, the share of Chinese currency from the volume of the global payment currency was only 2.2%. And this with a share of China in world GDP of about 19%. In addition, the yuan is not freely convertible.

The dollar accounts for slightly more than 39% of global estimates, while the US share in global GDP is about 16%. A similar situation is observed with the euro.

It turns out that the yuan is simply not allowed into the world trade markets. At the same time, many demands were put forward, including liberalization of the economy, free trading of the yuan, non-interference of the state in the national currency rate.

Therefore, Beijing decided to take drastic measures. Instead of continuing attempts to introduce it into the international monetary system, China will develop electronic yuan – the first cyber currency provided and managed by the state, and not by a bank or other private organization.

Currently, an extremely favorable situation is taking shape for such a step. The popularity of electronic payments is growing, people are avoiding physical contacts. Therefore, the cyber currency provided by the state has a high chance of success.

For China, this will allow not only to get away from the use of the dollar in payments, but also to insure themselves against currency fluctuations.

The Central Bank of China has already begun testing the new currency in several cities: Shenzhen, Suzhou, Chengdu and Xunan. At the same time, electronic money will be introduced in different areas in different cities. For example, in Suzhou it will be used to pay for transport, in Xiongang – for food and retail. Cyber yuan will probably also be tested in the regions where the 2022 Winter Olympics will be held.

Thus, the Chinese authorities intend to level the role of the dollar as an instrument of American foreign policy. There are cases when the United States resorted to political blackmail measures, threatening to disconnect some companies from the SWIFT dollar settlement system. Similar measures were taken in relation to Iran and Venezuela.

At the same time, investors and businesses are offered not only an alternative to the dollar. On the one hand, the introduction of cyber yuan will revitalize the global economy. On the other hand, to tie users to the Chinese financial system and stimulate joining the “One belt one way” initiative. That is, it is proposed to change American soft power to Chinese.

Report

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

What do you think?

Subscribe
Notify of
guest
9 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Abraham seggfej
Abraham seggfej
May 6, 2020

This is great news and just what the World needs; an alternative to the FIAT Paper Dollar that is backed by nothing ! It amazes me that China and their partner’s in the Shanghai Trading Bloc have taken so long to provide the Earth with a viable alternative to the $US. The US Gov will not like this as it means no more huge deficits that the World has to pay for by giving artificial value to the Dollar and allowing the US to spend way beyond it’s means. Well done to China and her trading partner’s !

SteveK9
SteveK9
Reply to  Abraham seggfej
May 7, 2020

The Yuan is also backed by … nothing. There is talk of backing the new currency with Gold. That would help give confidence to the digital Yuan. They have not announced that yet.

4comment0nly
4comment0nly
Reply to  SteveK9
May 7, 2020

right. and it won’t be backed by gold until they up their tonnage to 10 thousand tons of gold. otherwise, it would wreck them utterly, worse than if the US suddenly backed its debt with its national gold reserves – worse because China is nearly 3 times as levered as the US. (and we complain about our financial system haha!!)

4comment0nly
4comment0nly
May 7, 2020

“cyber currency” haha you have no idea what you’re talking about. this central bank digital currency (CBDC) is a two tiered digital money: the retail level is a digital cash-like currency fully managed by the second wholesale level of state banks who separately settle their own accounts directly with the central bank. the retail level is token based. the wholesale level is account based. all of it is highly controlled. the significance is two-fold. firstly, it gives China greater access to foreign reserve currency funding (as the Chinese economy lives off that), especially dollars and even in the form of… Read more »

Olivia Kroth
May 7, 2020

Why has my comment been deleted? I will place it here again. Leave it in!

Olivia Kroth
Reply to  Olivia Kroth
May 7, 2020

This is great news and just what the World needs; an alternative to the FIAT Paper Dollar that is backed by nothing !

Olivia Kroth
Reply to  Olivia Kroth
May 7, 2020

This was the very first comment on this article!

St. Longinus
St. Longinus
May 8, 2020

It’s very curious how every writer doesn’t mention the One Belt/One Road Initiative is to have Jerusalem as its capital. I can’t think it’s a mistake for every writer not to mention it. Hmmm….

Olivia Kroth
Reply to  St. Longinus
May 8, 2020

I have never heard of that before. To my knowledge, the One Belt/One Road has no capital at all, it is a common project of Asian countries, with China as its initiator.

Bay of Pigs 2.0 – armed invasion of Venezuela

Russia Moves to Gradually Relax Coronavirus Lockdown: Officials