Indeed, China and the PBoC is leading the pack of central banks globally eyeing central bank digital currencies (CBDC). The US on its own end is trying to catch up in the race to CBDCs dominance. However, it seems a handful of US lawmakers do not see eye to eye with CBDC or digital dollar proponents.
In a congress meeting held by the Subcommittee on National Security, International Development and Monetary Policy Team, participants bickered over the implications of CBDCs for the global financial system, especially America’s and its fiat currency. The US feels threatened by the progress of China’s Digital Yuan or e-CNY and is doing everything within its reach to catch up and overtake its economic rival.
US Lawmakers Say ‘No’ to e-CNY Usage at Tokyo Olympics Games
In a controversial attempt to stall the advancement of the Digital Yuan, some US lawmakers recently wrote a letter addressed to the American Olympic Committee. In the letter, the lawmakers, including Cynthia Lummis urged the committee to prevent the use and adoption of China’s CBDC at the 2020 Tokyo Olympics games. More speculations have arisen since China announced its CBDC. Another US expert opined that the Digital Yuan would aid the country to spy on citizens’ transactions; however, Chinese authorities have denounced this claim.
China could capitalize on the albeit slow pace of the US to achieve a further mileage on its CBDC. As already reported by the PBOC, China plans to achieve the globalization of the CNY with its digital version. Still, US Fed Chair, Jerome Powell is not bothered by this as he claimed the US would rather get it right than make the first move. Essentially, to Chairman Powell, it is more about direction for the US on the CBDC issue than speed.
While other lawmakers have tendered the argument that CBDCs would pose a threat to the private payment industry, a slew of them want the US to match the pace of China. The Congress also discussed countermeasures to impede the sovereignty of China on the CBDC technology.
Above all the concerns expressed by experts on the issue, the most relevant is the US dollar losing its place as the world’s reserve currency. This is what stakeholders in the US are most worried about; hence their frantic efforts to ensure that the e-CNY does not achieve more milestones.
China’s e-CNY Gives US CBDC a Wide Berth
At this point, the e-CNY has scored more progress points than the Digital Dollar. The US is yet to begin a pilot program for the proposed CBDC. In contrast, China has finalized the first phase of its CBDC testing. The projection for the launch of the e-CNY is 2022, while predictions of a billion people adoption is 2023.
China and some other Asian countries, including the UAE have their eyes on a transborder blockchain-based payment system. If the US and the Federal Reserve continues to dilly-dally over the digital Dollar, the hegemony of the fiat dollar is at stake.