US and China Still Riding the CBDC Release Race
China is ahead of the competitor
The release of the national cryptocurrency will open up a number of advantages for the country
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Throughout the history of its existence, money has repeatedly changed its form and content. The financial instrument, influenced by the trends of times and technologies, has been transformed, following the needs of users. In the 21st century, money is experiencing another revolution. The following cryptocurrencies, another financial instrument is about to appear on the market – central bank digital currencies (CBDC).
It so happened that some currencies took a special place in the financial market. For example, the US dollar and the Chinese yuan are actively used in trade. The transition of one of the tools to a more advanced digital format may attract the attention of users who previously preferred to work with a competing currency..
As of the end of October 2020, China is actively testing the digital version of the yuan. The United States is somewhat lagging behind, opening up the opportunity for the PRC to break out into the leaders. At the same time, the question of which of the two participants in the trade war will be the first to issue the national cryptocurrency remains open..
Experts shared with BeInCrypto their opinion on whether China will be able to seize the palm and divert the attention of users from the US dollar to the digital version of the yuan..
One of the first to present his vision of the situation entrepreneur and financier, member of the IDA Professional Directors Association, Nikolay Neplyuev. The expert noted that the Chinese yuan has long, albeit unofficially, been considered an additional world reserve currency (as opposed to the US dollar).
“Given the scale of the Chinese economy and the dependence on it of many economic factors, in particular, world markets, the yuan is a fairly reliable currency both for investment and for conducting various transactions, including speculative ones. And going into digital currency format will open up even more opportunities for China and attract additional investments. And this fact makes Western economists worry about reason, “Nikolai Neplyuev explained his point of view..
Scheme of processing requests of users of the national cryptocurrency of the PRC
The expert noted that China was one of the first to announce the creation of a national cryptocurrency and has enough resources to implement this large-scale project. Including, at the disposal of China are specialized specialists, technologies, experience and the possibility of capital investments with diversification of risks. Most financial and economic experts, in his opinion, fear that this project will allow the Chinese economy to make a huge breakthrough, as a result of which it will absorb its opponents..
However, the United States, he believes, has its own capabilities to confront. As an example, the expert cited a possible collaboration with Facebook and the release of the Libra cryptocurrency, as an analogue of the American crypto dollar.
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“In addition, the US is pushing its partners to create national currencies, whose economic indicators are tightly intertwined and largely dependent on the US economy. Therefore, China is unlikely to succeed in making an economic breakthrough and shaking the US dollar by creating its own national cryptocurrency. Of course, fluctuations in the foreign exchange market will take place and this is a convenient opportunity for speculation, but significant changes are not expected, since there is simply no reason for them, “the expert concluded..
Business Development Director of Overbit Aziz Kenzhaev, in turn, noted that most crypto exchanges are located in Asia. If the digital yuan is released, he that the volume of transactions with a believes new financial instrument on the market will be able to quickly grow..
“Japan also, after the announcement of the KNB about the success in the development of the digital currency, expressed concern, because digital yuan China’s financial regulator has been working on building a digital asset for several years. During this time, a large number of … More in Asia can dominate and become the second currency in all countries of the region. The digital yuan will be accepted by large retailers, not to mention such Chinese corporations as Aliexpress, Huawei and others, “the expert noted..
Graph of changes in the RMB / USD exchange rate from August 2019 to August 2020 Data: Statista
The digital yuan, Aziz Kenzhaev noted, can be integrated into the UnionPay payment system. Thus, the turnover of the yuan, in his opinion, will grow several times..
Also, she shared her opinion with the editorial staff of BeInCrypto Tatiana Maksimenko, official representative of the Garantex cryptocurrency exchange. She noted that the digital yuan should not be called a cryptocurrency. The digital asset, according to the expert, is CBDC Paper bills and coins may become a thing of the past due to a new financial instrument – central bank digital currency (CBDC). As of … More.
“The main goal of CBDC is to improve the financial infrastructure, which, in fact, has not changed much over the past 500 years. The introduction of CBDC will reduce the cost of payment transactions, reduce the cost of loans for end consumers, primarily for business. In addition, with the help of CBDC, China clearly expects to take control of international transactions, make these transfers more transparent, and reduce capital outflow from the country, ”Tatyana Maksimenko explained her point of view..
In her opinion, the situation has an indirect relationship to the dollar. The current picture in the market, she believes, will not lead to any radical decrease in user interest in the US national currency. At the same time, Tatyana Maksimenko drew attention to the fact that due to cheaper loans, China will be able to draw off a part of consumers from among large investors.
“And this will affect the demand for the dollar. But I repeat – there is no need to expect a significant restructuring of the world currency market. The US dollar will maintain its leading position for a long time to come, ”the expert concluded..
Recall that Russia recently entered the race for the release of the national cryptocurrency. Earlier, experts shared with the editors of BeInCrypto their opinion on how the digital version of the ruble can change the financial situation in the country.
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