“South China Morning Post” article on December 28, original title: “How China’s digital currency will thwart US dollar trap and help the world”
- The digital renminbi is a sovereign currency fully backed by the state, does not require a bank account and has full oversight by Chinese banking authorities
- Developing countries will embrace the convenience of China’s digital payment systems, which have great poverty-relief potential for the world’s unbanked poor
As China opens up to the world and integrates into the world trade and financial system, it has fallen into the “dollar trap” and has had to convert excess national savings into safe and internationally convertible U.S. Treasury bonds. For years, the U.S. has enjoyed the excessive privilege of printing dollars almost without limit. As Nixon-era U.S. Treasury Secretary Connally said, “The dollar is our currency, but it’s your problem”. Currently the dollar is increasingly being used (by Washington) as a weapon to impose economic sanctions on China.
Now China is committed to launching a national digital currency. It is also the result of a natural development, because China has become a far-reaching global leader in digital payment systems. Driven by the latest blockchain technology, China’s digital currency does not require a bank account. For the poor in countries around the world without bank accounts, this has huge potential for poverty reduction.
While the U.S. and its Western allies will not soon warm up to a Chinese digital currency, more Asian, African and Latin American countries will likely readily embrace the convenience and opportunities offered by China’s digital payment system, and a Chinese sovereign digital currency will make the system more convenient and secure. China’s digital sovereign currency will also help promote the “dual cycle” of the economy and accelerate domestic consumption, international trade and investment.
(Translated by Wang Huicong)