China Seeks To Reduce Dependence On Dollar

• China proposes an Asian-wide digital currency
• China aims to reduce the continent’s economic reliance on the US dollar
• The International Monetary Policy is also based on the US dollar

China proposes an Asian-wide digital currency to lessen the continent’s economic reliance on the US dollar amid the global adoption of CBDCs.

The United States dollar is without a doubt the currency that is used the most globally. The US dollar serves as the foundation for International Monetary Policy.

The USD is the currency of choice for international trade and exchange, and other currencies are pegged to the USD.

According to the findings, the Asian region’s local currencies suffer as a result of their reliance on USD for international transactions. It demonstrates that they are unable to obtain financing in their native currencies.

Asian Yuan Token Will Peg To 13 ASEAN Members

The most developed nations in Asia are China, South Korea, and Japan, to some extent. They also rely on the US dollar. The dominance of the dollar in international finance makes economies susceptible to United States-related spillover effects.

With the introduction of the Asian yuan token, China hopes to eliminate this economic vulnerability. Researchers in China claim that the Asian yuan token, a digital currency for all of Asia, aims to lessen Asia’s USD reliance on foreign businesses.

For remittances, currency inflation hedges, and international business, the Asian Yuan Token will be pegged to the currencies of 13 ASEAN member countries.

An Asian yuan token, according to the researchers, would lessen Asia’s reliance on USD.

The Asian token, like the CBDCs, would be supported by a distributed ledger technology (DLT), according to the researchers.

The token would be tied to 13 different currencies, including the currencies of 10 countries that are members of the Association of Southeast Asian Nations (ASEAN). The South Korean won, the Japanese yen, and the Chinese yuan are the other three currencies that would make up the token peg.

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 e-CNY pilot transacted approximately $14 billion

According to the journal, regional currency cooperation was established by East Asian economic integration over a 20-year period. The researchers think that the time is right to launch the Asian yuan token.

On October 10, the published issue was shared in an online post by South China Morning.

The researchers are affiliated with the World Affairs Journal as members of the Institute of World Economics and Politics, a CASS-affiliated research unit. Additionally, the World Affairs Journal collaborates with China’s Department of Foreign Affairs.

It also revealed that the digital yuan is supported by nearly 5.6 million merchant stores. The Inthanon-LionROCK multi-jurisdictional cross-border payment CBDC pilot also includes the Chinese central bank, as well as the central banks of Thailand, the United Arab Emirates, and Hong Kong. 

The Bank for International Settlements (BIS) announced in September that the CBDC cross-border payment pilot had been completed successfully. Over $22 million in transactions on the BIS Multi CBDC Bridge platform within a month were revealed in the announcement.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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