China’s CBDC will cause global financial instability

It seems that China is extremely interested in developing its CBDC. They even seem to be looking to reduce the gap in terms of use between the Yuan and the US dollar with its superiority in Blockchain. And there is no doubt that a cryptocurrency war between governments (especially China’s CBDC to others) will break out next year.

China’s CBDC (DC/ EP) will have a trading speed of 220,000 TPS

Yang Wang, a senior research fellow with the Fintech Institute of Renmin University of China, has mentioned a lot about the digital currency being developed by China’s central bank, called DC/ EP. To him, DC/ EP will have a peak transaction per second (TPS) speed of about 220,000. This is the maximum number compared to 40,000 for Paypal and 1,000 by Libra Facebook.

chinas-cbdc-will-cause-global-financial-instability

Yang said:

“In terms of technology, China’s digital currency excels, whether in its security level or speed, which means it will surpass competitors in user experience.”

Although TPS is just a specification, and the theory is much different from reality anyway. However, we continue to wait and see what this DC/ EP will do.

Although not yet released, according to Yang, China can draw about 2 billion international users of its crypto token in the first phase. In it, Southeast Asia and those along the Belt and Road Initiative will be encouraged to use the new payment channel.

China: Slash Yuan usage gap with the Dollar

On the other hand, China is also planning to utilize the DC / EP to reduce the gap between the yuan and the US dollar. This is a good time for China because many countries have considered wiping out their dependence on the US Dollar ​​as the reserve currency. The Bank of England governor, Mark Carney, argued that the dollar’s position was the world’s reserve currency. However, they can be replaced with a global digital alternative.

In July 2019, the People’s Bank of China, a blockchain trade finance platform, handled $ 4.4 billion in foreign transactions. Therefore, China is confident that its plan will soon be implemented.

If this ambition is successful, the global financial market will change. Specifically, the US dollar will weaken. And at the moment, Facebook’s Libra global stablecoin project will be affected as well.

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