In the latest news, China has announced the launch of its Digital Currency Electronic Payment System that will be backed by the Chinese Central Banks. This news has shaken the entire world and has caused a rippled across the global economy, forcing the world economy giants to be cautious and get themselves ready to compete with the Chinese economy and currency at an entirely new level as well as the ground.
By launching a digital currency electronic payment platform, China has marked its name as the first-ever country to launch a CBDC. The digital Yuan launched by China is set to improve the value of their local economy as well as strengthen its position in the global economy. Doing this has taken the competition between the currencies to the next level that is vying to become the top global reserve currency.
The launch of the Chinese Digital Yuan has worried the U.S. Finance Department as the economists and analysts of the world economy have already started commented on the potential the digital Yuan holds and how it has the capacity to de-thrown United States’ Dollar as the top global reserve currency.
Since the 1450s, the top states around the globe have been constantly in the state of the competition to earn the top position as the global reserve currency. The reason for acquiring such a status comes with benefits. The first benefit the currencies holding a position in the global reserve avail is low trading fees and the second is that they have to incur lower rates when borrowing money.
Although the above benefits prove to be very useful for the expansion of a country’s economy, they can also prove to be disadvantageous as the parties that let the countries borrow, can apply pressure through tariffs or filing sanctions against the responsible country.
It is a fact not hidden from anyone that the USD has been the ruling reserve currency since 1920 (World War I), but it is also a fact that there are many countries that have started to catch up to the United States and China is currently the most anticipated currency with the digital-Yuan in place.
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