Chinese officials are reportedly planning to create a digital East Asian currency to assert more independence from the United States dollar and foster trade relations within the region.
According to a recent report by Nikkei Asia, 10 members of the Chinese People’s Political Consultative Conference, the country’s main political advisory body, proposed the creation of a digital currency that would be backed by a basket of currencies including the Chinese yuan, the Japanese yen, the South Korean won and the Hong Kong dollar. The article does not specify on which Bitcoin Rejoin the crypto currency would be based.
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The proposal was reportedly submitted by Neil Shen, co-founder of Chinese travel services giant Ctrip and the country’s leading venture capitalist, as well as by Henry Tang, a Hong Kong politician and former chief secretary, among other influential figures. According to the report, they suggested that the private sector should develop the new regional crypt currency.
The yuan and yen are expected to account for more than 60% and 20% of the value of the digital currency respectively, as the proportion is supposed to be calculated on the basis of „the economic scale of the associated economies“.
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The article in the Nikkei Asia mentions that the new idea may have been influenced by Libra’s decision to run a multi-currency currency called LBR, as apparently the Facebook crypto-currency „looks no different than a digital dollar disguised as a basket of currencies“ according to China. He also notes that Libra has abandoned the idea of running a stablecoin with yen, which means it seems likely that Japan will become involved with the East Asian digital currency.
The East Asian crypto currency also seems to be in line with China’s intentions to create an autonomous US dollar payment network, which remains the most popular medium for international trade transactions.
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Details on the digital yuan, a CBDC project led by the People’s Bank of China, remain sketchy. There is no official launch date yet, although the pilot test is being actively pursued in several locations, including the cities of Shenzhen, Suzhou, the new area of Xiongan, Chengdu and the future site of the Winter Olympics.
It is possible that the digital yuan will be accepted in other countries, although it is currently unclear whether this would overlap with the proposed development of cryptomontage in East Asia. A recent article in the South Korean media, Yonhap, suggests that local merchants are willing to accept the digital yuan once travel restrictions related to the COVID are lifted and Chinese tourists start visiting their country again.