China has proposed to develop a common cryptocurrency for the whole of Asia as an alternative to the digital dollar

While the United States is working on developing its own CBDC to overtake China’s technological development, China is working on ways to reduce its dependence on the US dollar. As reported by SCMP, researchers from a Chinese state institute have put forward the idea of developing a pan-Asian digital currency to reduce the country’s dependence on the US dollar.

The Asian digital token can be pegged to 13 national currencies at once, including the yuan, Japanese yen, South Korean won, and others. In this way, they hope to strengthen China’s economic influence on neighboring countries and reduce the risks of possible financial restrictions from Washington.

«East Asian countries have long settled their trade through the US dollar, increasing currency mismatches and exchange rate risks. This became a trigger for the 1997 financial crisis in the region ,» said Sun Shuang, Liu Dongmin and Zhou Xuezhi, researchers from the Institute of World Economy and Politics of the Chinese Academy of Social Sciences. According to China, the Fed’s aggressive interest rate hikes are causing volatility in the financial market and negatively affecting the foreign exchange reserves of Asian countries.

Currently, China has expanded pilot tests of the national digital currency e-CNY in four provinces: Guangdong, Jiangsu, Hebei, and Sichuan. Following the announcement of the start of CBDC testing in China, the US government announced that it would begin work on launching a national cryptocurrency. One of the main reasons for the development and launch of a national cryptocurrency in the United States was China’s active actions. The U.S. Financial Services Committee believes that the launch of the Chinese CBDC will have a negative impact on the American economy, so the only solution is to be proactive by developing its own digital dollar.