According to the report, the current dominance of the U.S. dollar in cross-border transactions gives the U.S. Treasury the right to cut off most of the channels for a company or even a country to enter the global financial system. The renminbi only accounts for a little over 2% of global foreign exchange reserves, while the U.S. dollar accounts for nearly 60% of global foreign exchange reserves. US officials are not too worried that the current global financial system structure will be immediately challenged, but they are eager to understand how the digital renminbi will be distributed and whether it can be used to circumvent US sanctions. People familiar with the matter said that the Biden administration currently does not intend to take any action to deal with the long-term threat of China’s digital currency. Federal Reserve Chairman Jerome Powell recently stated that the agency is participating in large-scale research and development projects related to the digital dollar, and the United States may launch a digital dollar in the future.
Expert: America’s worry is completely unnecessary
According to Bloomberg, the Central Bank of China is expected to become the world’s first major central bank to issue digital currencies. When Beijing hosts the Winter Olympics in February next year, the digital renminbi is expected to be more widely promoted or to engage with the international market. Reuters also said that the current digital renminbi is positioned in the retail field of micropayments, and the next step needs to be transformed into a wholesale digital currency to be more likely to participate in the future international currency competition.
“China is one of the first countries in the world to research and pilot digital currencies, and it is a global leader in the field of digital currencies,” Pan Helin, executive director of the Institute of Digital Economy, Zhongnan University of Economics and Law, said in an interview with a reporter from the Global Times on the 12th. China’s attempt on digital renminbi is to improve the efficiency of global finance and solve some of its own financial system problems (such as insufficient cash flow). At the same time, it is also an opportunity to expand the currency share of the renminbi in the international circulation market and improve the renminbi’s currency status. This is within the scope of normal currency competition.
Pan Helin believes that the US’s concerns are completely unnecessary. The main purpose of China’s implementation of digital currency is to supplement domestic cash flow. Because in reality, the use of cash for electronic payments decreases, and digital currency replaces some of the cash in a convenient way. But at the same time, the digital renminbi can be used in international payments, with good convenience and high security. He believes that digital renminbi has the purpose of perfecting international payments. In international trade settlement, digital currency is safer, more reliable, and more convenient