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Will the Chinese Yuan Dethrone the Mighty $$?

What is one to make our of the the emergence of a blockchain-enabled digital Yuan?

China has become the first major economy to issue a digital version of its currency and that has Fed chiefs in the US concerned that the dollar’s status as the world’s go-to reserve currency might be under threat or even attacked.

“Anything that threatens the dollar is a national security issue. This threatens the dollar over the long term,” argued Josh Lipsky of the Atlantic Council. Nearly 90% of foreign-exchange transactions involve dollars and more than 60% of all global central-bank reserves are held in dollar-denominated assets.

But while China might have good reason to attempt to unseat the dollar as the world’s reserve currency, some don’t think a digital yuan will do that for them with most cross-border payments in trade or finance already digital.

Equally important, others argued that there is little chance that a digital yuan will dethrone the US dollar’s role as the global reserve currency because of (a) the size and liquidity of US debt markets, (b) the flexibility of the dollar’s exchange rate, (c) laws that let capital freely enter and exit the country.

They added there is little chance China will adopt the sort of Western institutions that global investors look for to protect their savings. An argument that needs further debate, in my opinion.

The US Federal Reserve is said to be studying the idea of a digital dollar but will not move without first having the support of the American people and Congress.

Are the days for the US Dollar global dominance numbered?

David Oualaalou is a Geopolitical Consultant, Award Winning Educator, Veteran, Author, and former International Security analyst in Washington, D.C.

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