Samson: China Tests the Digital Yuan … Is it a Threat to the Dominance of the US Dollar?
11th October, 2020
The Chinese central bank is issuing digital coins worth 10 million yuan ($ 1.5 million) to 500 randomly selected users, in a move that some consider the country’s first public test of the yuan’s digital payment system.
The People’s Bank of China (central bank) campaign comes at a time when central banks around the world are racing to issue their digital currencies to modernize payment systems as well as ward off potential competition from private cryptocurrencies.
As of Friday, anyone in Shenzhen, in southern China, can apply to join the program through the country’s 4 largest banks. But only some will win 200 yuan via lottery, according to the local government and banks. Winners can use the digital currency at 3,389 retail outlets, including Sinopec gas stations, Wal-Mart stores, CR Vanguard malls and Shangri-La hotels.
According to the local government, the digital gift campaign in Shenzhen is a normal test for the digital yuan.
Kenji Okamura, the top Japanese diplomat involved in financial affairs, said Thursday that China is seeking to gain a leadership advantage in its efforts to develop a digital currency. And a group of 7 major central banks, including the US Federal Reserve, set out to determine what digital currencies might look like, in an effort to catch up with China’s pioneering role and outperform private projects such as the stable currency of Libra affiliated with Facebook. Besides the Federal Reserve (the US Central Bank) and the Bank of England, the seven banks that have allied with the Bank for International Settlements include the European Central Bank, the Swiss National Bank, and the Bank of Japan.
The People’s Bank of China says it will further spread the yuan in a currency world dominated by the US dollar. A digital yuan would boost China’s global competitiveness as well as its strong position in global negotiations. It is expected that this digital currency will gain widespread acceptance in China, and this is due to the mobile phone sweeping the markets in the country and its record of good financial inclusion, according to a report published by the US “Modern Diplomat” website months ago.
These factors, along with the state-run system (ie, the digital yuan) will contribute to expanding the popular base of the digital currency system. Local residents are already accustomed to using applications such as WeChat Pay & Alipay and are likely to adopt this. Digital currency without hesitation. The report believes that the adoption of the digital yuan will have major implications for the Chinese economy and people, as it helps reduce costs and facilitate payment processes. The People’s Bank will also be able to monitor illegal payments and violations.
The report believes that the Chinese digital currency test poses a threat to US financial dominance, given that it provides an alternative to the dollar, and if it is successfully adopted, this digital currency will contribute to the distancing of global financial markets from the dollar-based system, and it will also help the Beijing government to address any disturbances in the global currency that drives it. Politically motivated.
A report on the US Foreign Policy Research Institute website published last month believes that the digital yuan will help China internationalize its currency, and promote the yuan as a competitor or alternative to the US dollar, not to mention that it will enable it to expand its monitoring capabilities, as the new currency will provide it with a window on economic activity.
For users inside or outside its borders, which will give it control over it.
The yuan would also allow China to circumvent sanctions, arms embargoes, and money laundering regulations by providing an alternative to the dollar-based international payment system, which is subject to monitoring by Western financial institutions, according to the same report. LINK
Samson: Parliamentary Finance and the Central Bank Governor discuss the “white paper” and foreign reserves
The Parliamentary Finance Committee held a meeting with the Governor of the Central Bank of Iraq, Mustafa Ghaleb, at the committee’s headquarters in Parliament.
The committee’s reporter, Ahmed Al-Saffar, told Al-Furat News that “the committee hosted today the governor of the Central Bank to discuss the bank’s position and foreign currency cash reserves, in addition to the white paper,” indicating that the Ministry of Finance presented the Financial Living Committee’s law for the remaining months.
The Minister of Finance, Ali Allawi, announced during a meeting with the Al-Furat satellite channel, that the ministry “will present the” white paper “for economic reform to the cabinet next Tuesday.
He added that “the paper includes a diagnosis of the origin of economic problems and remedies that will be difficult, but there is no alternative to them,” declaring that “the Central Bank’s foreign currency reserves amount to 52 billion dollars and Iraq will be in danger if it falls to 20 billion dollars.”