The proposed digital currency of China could activate the worldwide use of the yuan, as said by the CEO of the US cryptocurrency financial services firm circle. Last month, the People’s Bank of China(PBOC) declared that it is very close to releasing its own digital currency, saying that the major principle behind the move is to safeguard its foreign exchange sovereignty.
The central Bank of China plans to reveal its digital token along with a two-tier system, under which the People Bank of China and commercial banks would be legal issuers. The Circle CEO Jeremy Allaire said that “I look at this meeting as several goals, I think this is the greatest opportunity for the Chinese yuan to be distributed across the globe.”
Mr. Allaire further added that “This is expected to become a massive mechanism by which the yuan can be utilized in everyday transactions all over the globe. It is an ultimate foundation for the internationalization of the Chinese currency.” In recent years, Beijing has pushed hard to receive more international entities to use the yuan outside of China.
The American dollar is currently reserve currency of the world, whereas about 58% of all foreign exchange reserves in the globe are in dollars of the United States of America and nearly 40 % of the world’s debt is entitled in dollars.
The deputy director of the PBOCs’ payment department, MU Changchun stated that the fresh digital currency will have some similarities to Facebook’s projected Libra coin. It would be as secure as central bank generated paper notes. He claimed that it could be used on various platforms like Tencent’s WeChat and it works without an internet connection too. Libra was released in the month of June which will be backed by stable government backed money, unlike bitcoin and other cryptocurrencies that can be highly volatile and uncertain.