Anxiety In The US As China Creates The First Major Digital Currency

A cyber yuan gives Beijing power to track spending in real-time. Importantly, it's money that isn’t linked to the dollar-dominated global financial system.

Cyber Yuan vs Bitcoin and Altcoins

The cyber yuan is a government-sponsored digital currency designed to track the movement of every penny. Bitcoin promotes anonymity. 

Apps like Apple Pay,  Venmo, Paypal, and Google Pay just facilitate payments by skipping a credit or debit card middleman. They are not their own money. 

In contrast, China turned the yuan into a string of digits. It resides in cyberspace. On a  screen, it displays with a silhouette of Mao Zedong and looks just like the paper money.

First for Major Economy

Please consider China Creates its Own Digital Currency, a First for Major Economy

A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power.

China’s version of a digital currency is controlled by its central bank, which will issue the new electronic money. 

Beijing is also positioning the digital yuan for international use and designing it to be untethered to the global financial system, where the U.S. dollar has been king since World War II. China is embracing digitization in many forms, including money, in a bid to gain more centralized control while getting a head start on technologies of the future that it regards as up for grabs.

That an authoritarian state and U.S. rival has taken the lead to introduce a national digital currency is propelling what was once a wonky topic for cryptocurrency theorists into a point of anxiety in Washington.

Digitization wouldn’t by itself make the yuan a rival for the dollar in bank-to-bank wire transfers, analysts and economists say. But in its new incarnation, the yuan, also known as the renminbi, could gain traction on the margins of the international financial system.

Josh Lipsky, a former International Monetary Fund staffer now at the Atlantic Council think tank, said, “Anything that threatens the dollar is a national-security issue. This threatens the dollar over the long term.”

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