China is not losing pace in the race to create digital currencies for everyday transactions, as some public officers have proposed the creation of an East Asia digital currency. The idea originated from a meeting on May 21st by a group of 10 senior government officials.
The currency will be secured against a basket of currencies, just like the earlier model proposed by the Facebook libra team, before they encountered regulatory setbacks. At the moment, the proposed currency basket will comprise of the Chinese yuan, Japanese yen, South Korean won and Hong Kong dollar.
In drawing up the idea, the government officials involved inputs from private sector leaders like Neil Shen, an entrepreneur and co-founder of Ctrip, a renowned travel services leader in the region. They also agreed that the development of the currency would be private-sector driven. The state's involvement will be necessary for the aspect of giving the required endorsements in line with policies.
Why is China considering a regional cryptocurrency when its CBDC project is not yet completed?
There is still no definite date in sight for the launch of China's digital currency, although testing has already commenced in some Chinese cities like Suzhou and Shenzhen.
However, while China is still in the process of deploying its CBDC, the creation of a regional cryptocurrency will drastically reduce dependence on the US dollar in that region. For long, China has been looking for an opportunity to advance its currency, and break the dominance of the US dollars on international trade.
Therefore, if the regional digital currency idea is developed, China would achieve the trade autonomy they desire and also assert its leadership position in the region. The yuan is expected to account for 60% the currency value, as China has a bigger economy than its counterparts in the area.
Source: Cointelegraph
