China's Digital Currency Could Challenge Bitcoin and Even the Dollar A widespread digital yuan could also encourage countries and people.
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- Zhou Xiaochuan: China's choices for a digital currency system - Nikkei Asia
- China To Crack Down On International Cryptocurrency Trading By Its Citizens
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- China To Crack Down On International Cryptocurrency Trading By Its Citizens.
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For a long time, the country has been dissatisfied with the U. It even has an initiative to denominate international trade credit in Renminbi RMB rather than dollars. China overtook the U. The country has been the leading exporter for a decade. However, China has wanted to internationalize the Renminbi for longer than its leading trade status, as highlighted by a book from the Asian Development Bank.
It states that in , China launched a pilot scheme to use the RMB for trade settlement with Southeast Asian Nations which was subsequently expanded. That jumped to However, the vast majority of that figure relates to Hong Kong transactions. In the following year, China undertook numerous efforts to encourage international use of RMB. These lead to the Shenzen-Honk Kong stock link starting to trade, a change in the calculation of the USD-Renminbi exchange rate, and the Renminbi reaching the fifth most traded currency through Swift.
Zhou Xiaochuan: China's choices for a digital currency system - Nikkei Asia
China additionally ramped up spending on its Belt and Road initiative. The Belt and Road initiative aims to bolster trade between China and foreign countries by providing large loans. Since , the initiative has helped to fund international projects such as high-speed railways, industrial parks, and power grids.
The spending of huge sums abroad may be seen as a way to internationalize the Renminbi. It also allows China some leverage over foreign countries since, reportedly, the debt can be problematic to repay. China usually lends funds from one state-owned entity to another, rather than government to government.
China To Crack Down On International Cryptocurrency Trading By Its Citizens
Some have even suggested that if a country is unable to repay its debt, one way to compensate China might be to adopt the Renminbi. But today that seems farfetched. And may not be desirable to China. Again, there is a disconnect between where the funding is coming from and the currency used.
In many cases, the countries involved tend to use USD as an international alternative, even when China is funding them.