According to a financial technology consultant at CNBC, Richard Turrin, the Chinese central bank’s digital currency may undermine the dominance of the U.S. dollar over the next decade. He believes the digital yuan will replace its rival as the currency used in international settlements.
Digital yuan to replace dollar?
The Chinese government’s stance on private cryptocurrencies is notorious. Last year, the authorities banned all ventures related to digital assets, and the country’s monetary organizations and payment companies were also banned from brokering transactions involving digital assets.
On the other hand, the country takes a completely different stance towards digital currencies. In the last few months, China has taken a number of initiatives to promote the e-yuan and implement it.
Richard Turrin, a finance expert at CNBC, says China is “a decade ahead in all financial technologies.” For the United States to begin testing a digital currency, he says it would take at least five years.
Turrin said that, given the rapid growth of the e-yuan, it could challenge the dominance of the dollar and even replace it as a standard currency for international transactions:
You may be surprised to learn that China is the largest trading country and that the digital yuan will slowly displace the dollar as you buy things in China. Looking at the future, the digital yuan can play a significant role in reducing the use of the dollar in international trade.
Additionally, he believes that many countries will become less dependent on the U.S. national currency in the coming years:
As the future unfolds, we will observe a retreat, a risk management that aims to gradually reduce dependence on the dollar from 100% to 80%, 85%.
Russia will not circumvent sanctions with the digital yuan
The expert also discussed the armed conflict in Ukraine and the severe sanctions on Russia. While many countries declared economic war against Putin and imposed fines on Russia’s banks and oligarchs, China refused.
Turrin states that Beijing will remain neutral in this dispute and will not provide further financial assistance to Russia. Beijing will also not offer Russian citizens its digital yuan as an option to escape sanctions.