China is leading the development of the central bank's digital currency (CBDC) in the world. The digital yuan has already been tried out in parts of China, while western countries have just started talking about the CBD.

Six central banks such as the European Central Bank, the Bank of England and the Bank of Japan are collaborating on CBDC research and are said to have held only their first meeting in April. Earlier this month, the Bank of Japan announced that it would start testing the digital yen, although it did not say when. The United States has not even officially spoken of. Last month, Federal Reserve Chairman Jerome Powell did not report any specific progress on the digital dollar.

So nothing seems to stop the development of the Chinese digital yuan.

However, Takaya Nakamura, CEO of the Fisco Japanese Digital Currency Exchange, firmly believes that the digital yuan will not win because of the “China Dream.”

China Dream is a political slogan unveiled by President Xi Jinping in 2012. It is a national motto aimed at realizing the Chinese dream of a great renewal of the Chinese nation.

Addressing Quintelgrave, Nakamura said that China's dream will prevent the massive formation of the digital yuan.

He says, “I don't think the yuan will win.”

Since China, the “global factory,” has been removed from global supply chains due to the economic slowdown in the COVID-19 pandemic and hitting the United States, it will further China's dream of achieving patriotism and overcoming the crisis. Nakamura said this would isolate China from the global economy.

Nakamura said:

“The Chinese Communist Party must continue to affirm the dream of China, otherwise it will not be able to maintain its united strength and will collapse. But if they do a lot, they will isolate themselves more in the world and lose their economic competitiveness. This is a negative spiral.”

Nakamura said that China will lose its foreign exchange reserves when it is removed from the global trade network. Having sufficient foreign reserves is crucial as China needs a transition period for the digital yuan to break the hegemony of the US dollar.

“As long as you live in a time of dollar hegemony, having foreign exchange reserves is very important. Losing this will make it difficult for China to eventually push the digital yuan forward.”

Nakamura concludes that China will have an opportunity only if the United States handles the situation badly and does nothing while China moves to the digital yuan.

Source: CoinTelegraph