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China changed the US dollar with the digital yuan

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China changed the US dollar with the digital yuan

China changed the US dollar with the digital yuan
CONTENT

  • China reduces its dependence on the US dollar for fear of high inflation.

  • For the 1st half of 2020, the Celestial Empire sold over $ 100 billion in US government bonds.

  • The digital yuan may become the new rival of the dollar on the world stage.

International consortium of news organizations developing transparency standards.

Asian superpower is reducing its stake in dollar assets, fearing inflation and preparing to launch its own digital currency.

The Celestial Empire has been steadily reducing its dependence on the US dollar. Beijing may reduce its participation in US government bonds, lowering this figure from the current level of $ 1 trillion to $ 800 billion, according to estimates of the local news source Global Times.

Dollar good bye

China changed the US dollar with the digital yuan

The unprecedented injection of liquidity into the financial system continues to be a key factor behind this trend. In an attempt to support the global economy, the authorities of different countries are constantly printing money, continuing to devalue them..

The recent announcements by the US Federal Reserve added fuel to the fire. The American regulator announced an update of the political strategy, according to which the Fed will allow inflation to exceed the target. This further heightened investor fears about an imminent rise in inflation..

In addition, the escalation of political tensions between the United States and China played a role..

China is currently the world’s second largest holder of US debt. However, in recent years, China has been steadily reducing its stake in US Treasury bonds. In the first half of 2020 alone, the volume of their sales in China amounted to about $ 106 billion.

Who else is on a course to reduce dependence on the US dollar? Join the discussion in our Telegram channel – and you will find out everything!

According to the publication, Shanghai University professor Xi Junyang believes that in the future, China will reduce the amount of Treasuries in its possession from $ 1 trillion to $ 800 billion. However, he adds, it will be possible to talk about aggressive bond sales only in the event of an emergency, for example, a military conflict.

The rise of the yuan

Well-known Bitcoin critic Peter Schiff is of the same opinion. Commenting on the article, he tweeted:

China changed the US dollar with the digital yuan

“It seems to me that China will reduce this figure much more. And, probably, other states will do the same “.

This news from the Middle Kingdom serves as another reminder of the seriousness of Beijing’s intentions to jump off the dollar needle and challenge the USD’s global hegemony. China intends to make its own national digital currency, Digital Currency Electronic Payment (DCEP), its main weapon in this battle..

For the full story of how China created its digital currency, read here.

The digital currency issued by the national central bank of the PRC is expected to increase the availability of the yuan around the world, as well as ensure a more active transition of foreign trade processes into the digital ecosystem..

At the moment, China’s digital currency is in the final stages of beta testing.

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