China’s Central Bank Digital Currency (CBDC), the digital yuan is likely to contend with the dollar on its general acceptance as the currency for foreign trades and other international financial activities. According to Richard Turrin, a fintech expert, this transition can happen within 5-10 years.
China has been rolling out efforts for the launch of its CBDC and is currently advancing in the process, faster than any other country in the crypto space. Based on Turrin’s statement, as the biggest trading economy, supplanting the dollar for China would be a walkover. He pointed out the fact that the process might be slow but it’s achievable.
Although, many countries are still laid back as regards issuing their digital currency. They fear that digital currencies, irrespective of their form will make the financial system susceptible to cyber fraud, hackers, and general financial stress. Financial experts are also wary of the effect of cryptocurrency, they see it as a great challenge to their economy.
Turrin still urges a joint effort from other countries to reduce to the barest their reliance on the dollar, as this might be the only way to achieve the goal. If this is achieved, in 10 years or less, the dollar domination would have greatly reduced.
“What you’re going to see in the future is a rollback, a risk management exercise that seeks to slowly and maybe just slightly reduce the dependence on dollars, from 100% down to 80%, 85%,” Turrin said.
He is positive that the digital yuan will play a vital role in reducing the rate at which the dollar is used. China’s CBDC-focused economy is gradually gaining more acceptance and recognition, having completed a series of retail testing phases in the past year
Digital Yuan Takes on the Spotlight
During the Olympics in Beijing, events took a new turn for Visa which had formerly been the champion of electronic transactions as against cash usage. The e-CYN digital mode gained more acceptance by both home-based and international sportsmen.
The digital Yuan was accepted for payment of tickets in the stadium and ATM outlets for the exchange of foreign currencies to digital Yuan were situated in the stadium. This may pose a threat to many economies, especially now that e-CYN intends to replace the dollar.