Digital Currency Electronic Payment
China is set to debut its much anticipated DCEP across the country after it was tested across four countries in the country. In light of this new development, a booth economist at the University of Chicago has weighed in his opinion saying it might take years before the CBDC will get approval to be adopted all over the globe.
Economist Sees DCEP going international.
“After the pilot stage, I would imagine maybe [2 to 5] years … once we get to the stage where it is running smoothly it’s so logical to export it to some other south Asia, east Asia countries, whoever is using RMB — they’re going to be very happy to accept the settlement on the DCEP,” booth economist, He Zhiguo said. The new CBDC from China is an initiative that could get adopted on a global stage, provided they make use of the country’s belt and road initiative, which was developed in Beijing.
Can the DCEP compete against the US dollar?
The new launch of the Chinese digital currency can be seen as a retaliation for Facebook’s launch of the numerous Fiat backed libra project. But China’s intent to overthrow the libra might also have the backing of US-led systems powerhouse Swift or Fedwire. If the launch is successful, the DCEP will move ahead of the systems to achieve greater RMB internationalization.
With all being said, china might solely be the reason why the DCEP would be restricted on a global scale with its regulations on cash outflows. “Regarding whether DCEP helps internationalization of the RMB, yes it is true. As I explained, it is just better technology,” the economist added. “In the current situation, which is I don’t expect to see immediate lifting, which is basically heavy capital control imposed by PBOC, then there’s not a current discussion on whether the RMB is competing against the dollar.” he further said.
When questioned if the DCEP would disrupt the dollar system, He Zhiguo was quoted as saying “I understand that there are many people saying, ‘OK, so [DCEP] means is a really, really important step for disrupting the USD dominated system,’ I would say it has that potential, but I think it’s still far from that.”