China’s Central Bank Digital Currency (CBDC) also known as Digital Yuan is undergoing its testing phase. Among other countries who are working on their desired central bank digital currencies, China is currently on the lead in the development of the digital Yuan and may soon launch this CBDC. But a Fisco Executive believes that the China dream is expected to disrupt the digital Yuan’s development.
The China dream may hinder digital Yuan’s mass adoption
In 2012, the President of China Xi Jinping presented a political slogan known as “the China Dream” which aims at achieving the revival of the Chinese nation. The Executive at the Japan-based cryptocurrency exchange Fisco, Takaya Nakamura thinks that this so-called political slogan of China is what may hinder the development of the digital Yuan and its mass adoption. Nakamura clearly said, “I don’t think digital yuan will prevail”.
The COVID-19 Pandemic slowed down the economic condition of China due to which they are emphasizing more and more on the China dream. According to Nakamura, this may lead China further towards isolation and loss of their economy in the world.
“Chinese Communist Party (CCP) has to keep emphasizing the China dream otherwise they can’t maintain their unifying force and will be collapsed. But if they do it too much they will further isolate themselves in the world and lose their economic competitiveness. This is a negative spiral.”
“Foreign currency reserves” is crucial for China
Furthermore, the Fisco Executive said that China cannot afford the loss of the “foreign currency reserve” at the time when its digital Yuan requires transition time. In the case, China loses it the country will have to face difficulty in pushing its CBDC forward, says Nakamura.
As compared to other central banks that have planned to issue to their own central bank digital currencies such as Bank of Japan, Bank of England, ECB, the development of China’s CBDC is going great and there is nothing that is halting its way.