Chinese officials have made no secret that their huge acceleration efforts to introduce and distribute the digital renminbi are the beginning of their long-term strategy aimed at undermining the global hegemony of the dollar and expanding its influence.
Nevertheless, major US financial officials have turned a blind eye to any suggestion that implies concealing the deeper dangers of the U.S. dollar or even the national security of the United States in the global digital currency race. Even if China is advancing and the value of Bitcoin reaches $1
This week marked a public turning point for the most important U.S. government officials engaged in international finance-Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell. Josh Lipsky, director of the Atlantic Council’s Center for Geoeconomics, tweeted that this marked a “fire shot.”
At the New York Times event held with secretary Yellen on Monday, Andrew Ross Sorkin of CNBC expressed her full support for the digital dollar, central bank digital currency or CBDC. Although Sorkin made Yellen’s attention to a survey conducted by the Atlantic Council at the Belfer Center at Harvard University, which showed that 70 countries now have digital currency projects, Yellen’s focus is that digital currency can bring Americans Domestic interests.
Yellen said in a historic excerpt: “I think it makes sense for the central bank to study this.”
“I have collected that the people at the Federal Reserve Bank of Boston are studying its nature with researchers from the Massachusetts Institute of Technology. We do have problems with financial inclusion. Too many Americans really cannot use simple payment systems and banks. Accounts’ digital dollars (a central bank’s digital currency) can help. I think this can lead to faster, safer and cheaper payments. “
A day later, when he testified before Congress, Fed Chairman Powell Powell also created a new situation, saying that the digital dollar “is a priority for us.” He added: “We are committed to solving technical issues, and conducting extensive consultations with the public, and transparent consultations with all interested constituencies as to whether this should be done.”
However, when the Federal Reserve negotiates, China will execute the death penalty.
Neither Yellen nor Powell mentioned China’s leading position in the development of digital currencies, but that is the background. Their call-to-action text coincides with China’s announcement of an important partnership with the cross-border payment system SWIFT earlier this month, which eliminates all doubts about Beijing’s intention to internationalize the digital renminbi.
At the same time, China and Mauritius signed a free trade agreement, the free trade agreement, which is its first agreement with an African country to establish a digital financial testing ground. World Economic Forum experts Lauren Johnston and Mark Lantinney wrote: “As China develops its digital currency program, Mauritius may eventually be the leader in this field in Africa.” The free trade agreement agreed to promote “in Develop RMB clearing and settlement facilities in Mauritius”.
At the same time, the Beijing authorities used the Lunar New Year celebrations on February 12 to deploy three large-scale pilot projects to distribute digital yuan worth about 1.5 million U.S. dollars with “red envelopes” worth about 300,000 U.S. dollars. Then this week, China expanded its digital currency distribution test program to Chengdu, the capital of Sichuan Province, and the country’s fifth most populous city, where China distributed about $6 million in digital renminbi.
On February 24, 2021, Chengdu began to distribute 200,000 E-CNY “red envelopes” worth 40 million yuan in Yichang City, Hubei Province.
VCG | Visual China Group | Getty Images
China’s ambition seems to lay the foundation for the current digital renminbi, which will be unveiled at the 24th Winter Olympics in Beijing at the end of 2022. Presumably, Chinese organizers may require all participants and athletes to download an app to ensure that all payments they make for hotels, tickets, food, souvenirs, etc. during the game are done in their new digital currency. Even if there is no actual boycott of the Olympic Games in China, attention should be paid to the digital boycott by the United States and other teams.
It is difficult to compare China’s current leadership in digital currency development (until now ignored by US officials) with China’s global leadership in developing 5G (or fifth-generation) broadband cellular technology standards. Until the Trump administration responds with Western manufacturers, no one can compete with global Chinese 5G providers and equipment manufacturers, the most important of which is Huawei.
China has always put technological progress in the first place, which highlights its understanding that the country that occupied the technological commanding heights of that era in history is usually also a dominant international player.
If the United States loses the commanding heights of financial technology innovation, coupled with the weakening of the dollar’s global dominance, then Beijing’s benefits will be substantial.
The different privacy protection methods adopted by China provide it with a competitive advantage. The United States and Europe need to meet privacy issues, which will complicate the development of CBDC. On the contrary, Beijing sees digital yuan as a way to further strengthen its already powerful surveillance status, while also improving its ability to combat money laundering, corruption and terrorist financing.
In the latest paper published by CNAS, authors Yaya J. Fanusie and Emily Jin captured China’s deep understanding of the geopolitical importance of digital currency projects. They compared how Yao Qian, the former head of the People’s Bank of China’s digital currency research department, compared China’s digital currency development with China’s previous advances in robotics, big data, and artificial intelligence.
In a speech at the United Nations Information Technology Conference, the author said: “Yao Ming has designated digital currency as part of the “next war”.” He was referring to the article with that title in The Economist, which discussed technology. The central role in the competition between China and the United States.
Considering its bet as a global reserve currency, the Fed is worried that the introduction of the digital dollar is too hasty. However, the greater geopolitical danger lies in how quickly it falls behind.
The United States can not only rapidly develop the digital dollar, but can also cooperate to create the digital euro, digital pound, and digital yen, but it can still win the game. The total firepower of these currencies will quickly close the innovation gap. It will also prove the value of cooperation with allies, which is the core of Biden’s foreign policy.
Frederick Kempe is a best-selling author, award-winning journalist and president and CEO of the Atlantic Council, the most influential US in global affairs One of the think tanks. He has worked for the Wall Street Journal for more than 25 years as a foreign correspondent, assistant editor-in-chief, and the longest serving editor of the European version of the paper. His latest book “Berlin 1961: Kennedy, Khrushchev and the Most Dangerous Places on Earth” is a bestseller of the “New York Times” and has been published in more than ten languages. Follow him on Twitter @FredKempe and subscribe to Turning Point here. He checks the hot news and trends of the past week every Saturday.
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