China finds itself in a strong position to release its central bank digital currency, the eCNY, following successful trials. The completion of the eCNY trials coincides with the rollout of the Covid-19 vaccine, and now that countries can ease travel restrictions and the hard-hit tourism industry can recover, China’s outbound tourism could become a catalyst for the global usage of the eCNY. This could become a defining moment for the internationalization of China’s currency, the renminbi, with a small chance of strengthening it enough to even begin challenging the U.S. dollar as the top global currency.
This could become a defining moment for the internationalization of China’s currency, the renminbi.
Since the 2008 Global Financial Crisis, China has worked to increase the overseas usage of the renminbi, especially as a means of challenging the dollar’s dominant position in international trade and finance. Despite consistently promoting the renminbi, China has faced significant hurdles in internationalization, particularly because of its strict currency controls. Importantly, the trade financing of Asian supply chains remains mostly in dollars, comprising approximately 80 percent of Asian banks’ international activities in the third quarter of 2019.
Meanwhile, to bolster China’s already strong currency regulation, the People’s Bank of China (PBoC, China’s central bank) developed the eCNY. Due to the PBoC’s oversight of the eCNY, it has the power to both monitor macroeconomic trends and manage the renminbi more directly.
Read the full article from The National Interest.
More from CNAS
ReportsSanctions by the Numbers
Cyberattacks pose a serious threat to U.S. national security and the integrity of the global commerce and financial system, especially when state-sponsored actors conduct and/...
By Jason Bartlett & Megan Ophel
PodcastThe Myths and Realities of China’s Digital Currency
Yaya Fanusie joins WPR’s Elliot Waldman for a conversation about what China’s digital currency is and what it’s not. Listen to the full conversation from World Politics Revie...
By Yaya J. Fanusie
CommentarySharper: The Next 100 Days
As the administration marks its 100th day in office, what lies ahead?...
By Anna Pederson & Chris Estep
Congressional TestimonyChina’s Pursuit for Leadership in Digital Currency
Submitted Written TestimonyI. Strategic Assessment Vice Chairman Cleveland, Commissioner Wessel, and distinguished members and staff of the U.S.-China Economic and Security Re...
By Yaya J. Fanusie