The future of digital currencies. However, they do cause problems for governments that control the money supply. Central banks, monetary authorities and governments are not particularly pleased with the emergence of this new asset class that seeks to turn traditional power into a technological alternative.
However, it will not be long before they surrender and find happy media by introducing their own digital currencies. Being so close to digital transformation, China appears to be the first country to do so, with the goal of dominating the Asian nation’s currency, matching the world’s second largest economy and population.
China is preparing to issue its digital currency to continue to dominate the world
Unlike other cryptocurrencies, the Chinese version is on track to issue a digital yuan or electronic digital currency (DCEP) controlled by the People’s Bank of China, the central bank of China, and the BPOC. Distribution will take place in two tiers.
The PBOC has partnered with the central banks of Thailand, the United Arab Emirates and Hong Kong to explore the possibility of developing a digital currency system across the border. The team is investigating the use of distributed ledger technology.
US and Europe: “sleeping on the wheel”
Meanwhile, the governments of the US and Europe seem to be lagging far behind China in accepting the evolution of the foreign exchange market. U.S. Treasury Secretary Janet Yellen said it was a “very ineffective” way to conduct cash transactions. He drew attention to the use of digital currency for “illegal funding”.
Christine Lagarde, president of the European Central Bank, said that central banks would not hold bitcoin as a currency, citing the so-called “sham transactions” that point to the growing need for regulation.
Secretary Yellen and President Lagarde did not say that the distribution of digital currency was a direct challenge to government control. This power allows you to control the flow of funds, so cryptocurrencies pose a direct threat to it.
Controlling the global money supply paves the way for China to achieve its goals
The digital yuan will not undermine China’s control over the money supply, as the BPOC will have control over this medium of exchange. However, as the first country to launch a digital version of its currency in the market, China will accelerate its efforts to become a leading economy with a significant global impact. A digital yuan that will become the currency used around the world, even outside the United States and Europe, could have a major impact on the International Monetary Fund, undermining the US dollar’s position as the world’s reserve currency.
Meanwhile, Russia is operating on the digital ruble as President Vladimir Putin and President Xi realize that greater influence on global tariff mechanisms leads to greater power.
The speed and efficiency of the digital payment system motivates manufacturers and consumers around the world to use digital yuan or digital yuan when available. China and Russia are powerful producers, and China’s population makes it the world’s largest consumer of raw materials. China and Russia may jointly mandate rules that support the use of their digital currencies in international cross-border transactions.
RMP is not a free convertible currency; In the case of digital RMB this may be completely different
One of the problems China has faced in recent years is finding a balance between controlling its currency and flowing it freely, allowing it to be completely convertible without restrictions. Freely convertible currencies such as the dollar and the euro create the cash flow needed to achieve reserve currency status.
As the digital yuan becomes the world’s reserve currency, industry dominance based on data for technology companies will dominate global trade and Chinese influence.
China’s actions on digital currencies send a message to groups in power in the United States and Europe that they will have long – term consequences for the world’s future. Digital dollars and euro cryptocurrencies that use blockchain technology are no longer extravagant – on the contrary, they are now becoming a necessity.