The current administration of the United States government under President Joe Biden is keeping a close eye on the development of China’s central bank digital currency (CBDC), known as Digital Yuan. The main concern that the Biden administration does have is the potential of the digital Yuan to adversely affect the position of the U.S dollar as the global reserve currency.
Digital Yuan could threaten the dollar as the world’s reserve currency
A report by Saleha Mohsin indicated that the U.S government does indeed feel intimidated by the possibility of the dollar not being the de facto currency for the world’s reserve in the future. The dollar has been the staple of the global economy for so long now that many might think it impossible for anyone to replace it, but that is exactly what China can potentially accomplish.
The aforementioned report gave us some much-needed insider information on what the U.S authorities think about the digital Yuan. The main concerns center around the distribution method as well as the digital asset being utilized to bypass sanctions. Furthermore, it had been stated that the State Department, National Security Council, Treasury, and Pentagon are currently ‘bolstering efforts’ in an attempt to truly comprehend all of the different aspects and ramifications of the digital Yuan.
China currently leads the charge in terms of CBDC (Central Bank Digital Currencies), and so it is easy to understand why the Biden administration would want to keep tabs on things going on in China as the nation is the chief competitor to the U.S in terms of both politics and economics. As of right now, China also possesses a highly advanced and complex digital payment system (as do many other Asian nations), and so the implementation of a digital Yuan has a much higher chance of success.
Several countries adopt CBDC as the U.S struggles to keep up
The concept of CBDC has been adopted by various countries other than China. Japan has the digital Yen, Russia has the digital Ruble, and so on. Other countries such as France and Sweden, and Australia are also currently underway with their plans to implement their own respective versions of CBDC.
The United States, on the other hand, has insisted that in order for there to be a digital dollar, it is imperative that the fundamentals and long-term risks and benefits of such a decision be completely explored and subsequently understood beforehand. Although there have been some plans to introduce CBDC in the U.S through the likes of Christopher Giancarlo, the Chairman of the CFTC, the U.S still falls behind other countries in terms of progress for CBDC implementation.