China Considering East Asia Regional Cryptocurrency to Rival Dollar and Libra

Published at: June 17, 2020

Chinese officials are reportedly planning to create an East Asia digital currency to assert more independence from the United States dollar and foster trade relations within the region. 

According to a recent Nikkei Asia report, 10 members of the Chinese People's Political Consultative Conference, the country’s top political advisory body, proposed creating a digital currency that would be backed by a basket of currencies including the Chinese yuan, Japanese yen, South Korean won and Hong Kong dollar. The article does not specify which blockchain the projected cryptocurrency would be based on. 

The proposal was reportedly put forward by Neil Shen, co-founder of Chinese travel services giant Ctrip and the country’s top venture capital investor, as well as Henry Tang, a Hong Kong politician and former chief secretary, among other influential figures. As per the report, they suggested that the new regional cryptocurrency should be developed by the private sector. 

The yuan and yen are expected to account for more than 60% and 20% of the digital currency’s value respectively, as the ratio will allegedly be calculated based on “the economic scale of the associated economies."

The Nikkei Asia article mentions that the new idea could have been influenced by Libra’s decision to run a multi-currency coin called LBR, since apparently the Facebook-initiated cryptocurrency “seems no different from a digital dollar disguised as a currency basket” to China. It also notes that Libra has abandoned the idea to run a yen-pegged stablecoin, meaning that Japan seems likely to become involved with the East Asia digital currency.

The East Asia cryptocurrency also seems to fall in line with China’s intentions to create a payment network autonomous from the U.S. dollar, which remains the most popular medium for international business transactions.

There is still little detail on a Chinese central bank digital currency 

Details about the digital yuan, a CBDC project run by the People’s Bank of China, remain scant. There is still no official launch date despite the pilot test being actively carried out in various locations including the cities of Shenzhen, Suzhou, Xiongan new area, 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 not clear whether that would overlap with the proposed East Asia cryptocurrency development. A recent article from South Korean news outlet Yonhap suggests that local merchants are ready to accept the digital yuan once the COVID-related travel restrictions lift and Chinese tourists start visiting their country again.

Tags
Regulation
China
Cbdc
Politics
Libra
Related Posts
Digital yuan will combat US 'dollarization' says former PBoC governor
China’s digital currency approach will favor its domestic retail system and prevent the dollarization of the economy according to one former senior official. Zhou Xiaochuan, the president of the Chinese Finance Association and former governor of the People’s Bank of China (PBoC), told attendees at a Eurasia Forum conference on Oct. 27 that the central bank’s focus in creating a digital currency differed considerably from that of the countries in the Group of Seven — Canada, France, Germany, Italy, Japan, the U.K., and the U.S. According to Xiaochuan, the G7 was mainly concerned with “the challenges raised by Libra, Bitcoin, …
Regulation / Oct. 29, 2020
Regional CBDCs Can Fuel International Trade, but USD Seems Unbeatable
As central bank digital currencies continue to be researched and tested by countries across the globe, it becomes more apparent that the United States dollar’s reign might be challenged once the concept is implemented on a regional scale. While most retail CBDCs focus on internal economic matters, some projects aim to facilitate trade relations within a specific region, forming a digital alternative to the greenback. The most eloquent example would be the East Asia cryptocurrency that was proposed earlier in June — a virtual asset backed by a basket of currencies including the Chinese yuan, Japanese yen, South Korean won …
Adoption / June 25, 2020
Bank for International Settlements Calls CBDCs a Potential ‘Sea Change’
In advance of its coming annual report, on June 24 the Bank for International Settlements released a special chapter from that report on digital payments — especially central bank digital currencies, a topic that’s attracted tremendous interest in recent months. The report encourages central banks to treat CBDCs as their future, saying: “One option at the frontier of policy opportunities is the issuance of CBDCs, which could amount to a sea change.” A recent shift in favor of CBDCs The BIS found that there had been a major bullish shift in sentiment for CBDCs since the beginning of this year …
Regulation / June 24, 2020
Chinese Communist Party Adds Crypto to Curriculum
A higher education institution that trains Chinese Communist Party officials has published a new book about cryptocurrency. According to a local blockchain news report on May 19, the Party School of the Central Committee of the Communist Party of China — also known as the Central Party School — published the book as part of a book series on disruptive technologies. Previous entries in the series include “A Dialogue With Party Leaders About AI” and“ A Dialogue With Party Leaders About Blockchain”. The aim of the book series is to provide a source for party officials and the general public …
Bitcoin / May 19, 2020
Law Decoded: Cents and stability, Nov. 20–27
Editor’s note As many of you were certainly following in real time, a bull market gave way to a bloodbath yesterday, which happened to be Thanksgiving in the United States. Personally, I’ve never thought that Bitcoin’s (BTC) price was any sort of proof of its value proposition, but for many, its retreat yesterday certainly dashed many a planned gloat to family members more receptive to massive gains than concepts like censorship resistance. But obviously, volatility is part of the game with cryptocurrencies. One of the more prominent solutions to this problem has been the rise of stablecoins, especially following the …
Regulation / Nov. 27, 2020