Chinese Researchers Propose Asian Digital Currency to Reduce Reliance on US Dollar – Researchers from the Chinese government have recommended the creation of a new digital currency across Asia in order to minimize the region’s reliance on US fiat money. According to the South China Morning Post, the common coin will also help maintain financial stability while increasing regional monetary cooperation.
According to Song Shuang, Liu Dongmin, and Zhou Xuezhi of the Chinese Academy of Social Sciences’ Institute of World Economics and Politics, the digital token would be pegged to a basket of 13 currencies, including the Chinese yuan, Japanese yen, South Korean won, and the currencies of ASEAN’s ten members.
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According to the report, the weighting for each may be similar to that of the International Monetary Fund’s special drawing rights, which act as an international reserve asset. The proposed currency might be supported by distributed ledger technology. Such an approach would try to avoid any of the participating countries from dominating.
“More than 20 years of deepened economic integration in East Asia has laid a good foundation for regional currency cooperation. The conditions for setting up the Asian yuan have gradually formed,” the researchers wrote in an article published in August by the World Affairs journal — an edition linked with the Chinese Ministry of Foreign Affairs — and then made available online in late September.
This is not the first attempt to establish a regional currency in Asia. Other examples include Malaysian Prime Minister Mahathir Mohamad’s proposal during the 1997 Asian financial crisis, which he repeated in 2019, and the 2006 concept for an Asian Currency Unit (ACU) by the Japan-led Asian Development Bank.
If realized, the latest move is expected to be led by China, the world’s second-largest economy, which is continually expanding the pilot region for its own sovereign digital currency, the digital yuan. The People’s Bank of China (PBOC) recently revealed that by the end of August, e-CNY payments had topped 100 billion yuan (nearly $14 billion) in 360 million transactions.
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Chinese Researchers Propose Asian Digital Currency to Reduce Reliance on US Dollar – Although the Chinese government maintains that its central bank digital currency (CBDC) is primarily intended for domestic use — approximately two dozen major cities are participating in the testing, with over 5.6 million merchants accepting the coin — the PBOC is also looking into cross-border settlements with the monetary authorities of Hong Kong, Thailand, and the United Arab Emirates.
