A Digital Yuan Should Be Welcomed by the U.S.
An app-based international Chinese currency would be good for American exports and the global financial network — which is also why it may never happen.
A digital yuan would be a good thing for the world.
Source: Bloomberg
Once again, people are talking about a digital currency. This time, it’s the potential competitive threat from a digital yuan. But there’s no threat here at all — if China creates a digital currency, it’ll be little different from the payment methods they already use. And if the yuan partially replaces the dollar as the global reserve currency, that’s a good thing, not a bad thing.
Since about a year ago, China’s government has been publicly discussing the possibility of a digital yuan. When people talk about digital currencies, they think about Bitcoin and other cryptocurrencies, but a digital yuan — or any digital government-backed currency — would almost certainly not be like that. It would simply be an app on people’s phones that would hold a certain amount of yuan that you could send to other people. In other words, it’s more like Venmo than Bitcoin. This makes sense, because Bitcoin uses an extremely laborious and expensive process to verify transactions, but transactions with the digital yuan app could just be verified by China’s central bank much more cheaply.