Author: Steven Ehrlich
Affiliation: Forbes
Organization/Publisher: Forbes
Date/Place: October, 2020/USA
Type of Literature: Article
Word Count: 1626
Keywords: China, Yuan, Currency insurgency, Dollar, USA
Brief:
The author discusses China’s continuous efforts towards halting the hegemony of the US dollar in the global market, by internationalizing the Yuan. China has already taken various steps to ensure the Yuan’s increased use in international trade and also as a central bank reserve currency. It will be the first of its kind sovereign digital currency introduced by a country. What seems to be a Currency Cold War, actually involves only one side being very proactive. The US has been reluctant so far, owing to the overwhelming superiority of the dollar in the global market. The author chooses to call it a digital currency insurgency waged by China on the primacy of the dollar—an insurgency designed to weaken government control and legitimacy while increasing insurgent control and legitimacy. Moreover, China is laying a perfect ground for this by getting its currency included in the International Monetary Fund’s Special Drawing Rights basket, internationalizing it through swap agreements and appointing yuan-clearing banks in 20+ countries around the world. Additionally, the use of economic development packages such as the ‘Belt and Road Initiative’ will drive further adoption of the currency. When the markets crashed in March earlier this year, investors and central banks across the globe rushed to the dollar. The Yuan in relative terms is a new entrant and has various challenges to face as well as the freedom to grow in the global market. With a reluctant US so far, China with its tactics and currency as a weapon is definitely keen to take up its role as a future leader in the global market.
By: Usman Khan Pathan, CIGA Research Associate
