A report from JPMorgan Chase & Co points to the potential for China’s proposed central bank digital currency (CBDC) to undermine the status of the US dollar as the world’s reserve currency.
“There is no country with more to lose from the disruptive potential of digital currency than the United States,” said the report, by analysts including Josh Younger, head of U.S. interest-rate derivatives strategy and Michael Feroli, chief U.S. economist.
“This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services conveys immense advantages.”
Shanghai-based fintech expert Rich Turrin recently told China Banking News that the CBDC could abet the internationalisation of the renminbi by allowing partial convertibility.
““With the CBDC China can say we can selectively pick countries and institutions that we want to use the digital RMB,” said Turrin.
A senior official from PBOC first announced in September 2019 that the launch of a Chinese CBDC was all but “imminent” following a five year period of research and development.
PBOC recently announced that it had commence internal testing of its CBDC – also referred to as the Digital Currency/ Electronic Payments (DC/EP) system, at multiple cities around China including Shenzhen, Suzhou, Xiong’an and Chengdu.