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China will aim to rival the U.S. dollar, not Bitcoin, with its highly-anticipated digital yuan

It seems that China will target its opponent is the US dollar, not Bitcoin. In particular, the highly anticipated digital yuan. This is information revealed by Matthew Graham, a veteran investment banker in China and the CEO of Beijing-based Sino Global Capital.

china-will-aim-to-rival-the-us-dollar-not-bitcoin-with-its-highly-anticipated-digital-yuan

With its forthcoming digital yuan, China will aim to rival the U.S. dollar, not Bitcoin

He stated:

“About the forthcoming digital currency and argued that the Chinese government sees new technologies as a leapfrog opportunity to chip away at the dollar’s ​​hegemony.”

Boxmining founder Michael Gu at the Unitize conference on July 6, Graham said that even though despite extremely difficult for China to internationalize the renminbi:

“Swift, CHIPS, Fedwire… they’re antiquated, they’re expensive, they’re slow. It’s 2020 and we have transactions that take three days to clear and that are far more expensive than they should be. All of these technologies that underpin much of the USD-centric global economy are really showing their age. So that’s a big opportunity for China.”

Beijing uses the acronym DC / EP to refer to its upcoming digital currency payment system. They have borrowed a lot of technology details from blockchain, including concepts like UTXO.

However, DC / EP is far different from public blockchains like Bitcoin. In particular, the DC / EP will be issued by the People’s Bank of China and remain under the full control and authority of the central bank, as with other existing national fiat types.

Graham emphasized:

“If you’re approaching this DCEP from a crypto or blockchain framework, I think you’re going to really have a hard time understanding what it is and what and why it’s so important.”

New technologies integrated into the digital yuan, including those learned from blockchain, are being used for another purpose.

Gu cited comments from the chairman of the China International Economic Exchange Center, who has previously said:

“DCEP can achieve the real-time collection of data related to money creation, bookkeeping, etc, providing a useful reference for the provision of money and the implementation of monetary policies.”

Graham added that for monetary policy, DCEP could be very useful for implementing negative interest rates. Moreover, it opens up a lot of capabilities in terms of AI and machine learning for fraud detection and there are potential program aspects as well.

Contrast this with systems such as Fedwire, CHIPS, SWIFT – the “plumbing” that underpins much of the global dollar economy. These, as Graham noted, are thirty, forty, fifty-year-old technologies, with all the frictions and costs.

He said:

“There is a leapfrog opportunity. DCEP’s not about Bitcoin. It’s about potentially internationalizing renminbi, at least to some extent.”

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