China will pursue digital currency, would this break the dominance of USD?

[Faith_Lock]

China will pursue digital Yuan. For posters who have a background in finance and business, would this help break the dominance of USD?

If the answer is yes, how long do you think it would take? and if there are other steps that China need to take to make it happen?

https://finance.yahoo.com/news/china-undoubtedly-pursue-digital-yuan-184024654.html

China Will ‘Undoubtedly’ Pursue Digital Yuan, Central Bank Says

David Pan
CoindeskApril 6, 2020

China’s central bank has sent one of its strongest signals yet of a commitment to creating a digital version of the yuan.


The notice is a summary of the 2020 National Currency Gold Silver and Security Work Video and Telephone Conference, convened on Friday by Yifei Fan, the central bank’s vice governor. One of the annual meeting’s goals was to lay out top priorities for the bank in this coming year.


While this was at least the third time a digitized yuan, or Digital Currency Electronic Payment (DCEP), was mentioned in the annual meeting, the unequivocal language used indicates a firmer stance on the project than before.


Along with the push for DCEP, the PBoC aims to reform the system to issue and withdraw cash and other issues to better manage cash circulation, according to the notice from the latest meeting,

Other priorities on the bank’s agenda include strengthening a crackdown on counterfeit money and testing programs to manage large quantities of cash.

Besides departments in the PBoC, officials from major state-owned commercial banks joined this meeting, according to the notice.

 

[pothead]

It's a govt controlled currency, will never replace Dollar.

Since market does not decide the value of Yuan, no major nation will ever bet on it.
It's a DOA analysis.

 

[Faith_Lock]

I see.

I don't know about the DOA part though.

Why doesn't China float its currency? What is the disadvantage of letting it float?

 

[Faith_Lock]

It seems a lot of people complain about it. But why aren't any government try to create an alternative.

What are the necessary conditions for any government to create an alternative?

 

[pothead]

I see.

I don't know about the DOA part though.

Why doesn't China float its currency? What is the disadvantage of letting it float?

simple, CCP is not confident bout it's currency, hence they don't float it.
Even the relatively new Euro is more valued than yuan,

All this bluster from CCP about their economy etc etc & still they don't float their currency.
Really tells you the truth about the power they hold in the world.

 

[Faith_Lock]

simple, CCP is not confident bout it's currency, hence they don't float it.
Even the relatively new Euro is more valued than yuan,

All this bluster from CCP about their economy etc etc & still they don't float their currency.
Really tells you the truth about the power they hold in the world.

What specific aspect of their currency is China not confident about? Are they afraid of a run on the currency?

 

[pothead]

What specific aspect of their currency is China not confident about? Are they afraid of a run on the currency?

Their behavior shows lack of confidence in their currency.
CCP operates very much like a dictator, with absolute control.
Reason for that is that they have too many things to hide.

Markets on other hand don't care about dictators. They only care about their returns,
CCP with all it's might can force media and govts to toe it's line.
BUT
it can't do zilch about the most basic human tendency to look for profit when they are investing their money.

CCP knows this & hence why their currency is controlled. Not just currency, even their markets are carefully controlled.

 

[TruthSeeker]

Chinese currency, of any kind, cannot replace the dollar until China has a free market and allows foreign investment comparable to that allowed by the USA and Euro nations.

 

[Song Hong]

The ultimate backing of dollar is US military.

 

[TruthSeeker]

The ultimate backing of dollar is US military.

This is not true. Even though the USSR had a tremendous military, the ruble was never an international currency. The US dollar can only be an international currency as long as foreigners, non-US citizens, can both buy and SELL dollar-denominated investments, and dollars themselves, in a free market of willing buyers and sellers. And such non-US citizens will only want to do that if the USA legal institutions are predictable and the USA domestic economy is stable and has some potential for growth.

 

[Song Hong]

Rouble was medium of exchange in Eastern Bloc.

USD became reserve currency only after US army swept the entire Europe.

This is not true. Even though the USSR had a tremendous military, the ruble was never an international currency. The US dollar can only be an international currency as long as foreigners, non-US citizens, can both buy and SELL dollar-denominated investments, and dollars themselves, in a free market of willing buyers and sellers. And such non-US citizens will only want to do that if the USA legal institutions are predictable and the USA domestic economy is stable and has some potential for growth.

 

[Khan_21]

Toilet paper is more valuable than us dollar, just ask the covid19 ravaged country of murica.

Its the reverse. Covid 19 has proved that Dollar is king and will remain for a long time.

Pandemic proves there is only one world reserve currency
The mighty dollar shows reserve currency dominance. Plus, India's banking troubles and travel industry under COVID-19.

28 Mar 2020 14:34 GMT Business & Economy, Coronavirus pandemic, Banks

• 
• 
• 
• 

Rich nations have spent more than $9 trillion so far on tackling the economic fallout from COVID-19. And more spending is on the way as governments try to ensure there is a functioning economy post the pandemic.

The damage done is likely to surpass the financial crisis and maybe even the Great Depression.

It is the worst economic crisis in the last 70 years.

Now investors are rushing to safety. The 11-year bull run in US stock markets is over. And there is one safe haven everyone is banking on and it is not gold. It is the dollar. For all the talk that the dollar would lose its reserve currency status, it proved to be just that, talk.

Emerging markets have borne the brunt of the rush for dollars. Indonesia's rupiah lost almost 14 percent of its value since the beginning of the year. The Russian rouble and Mexican peso have lost a fifth of their value.

The problem for emerging markets is that they may want to cut interest rates to stimulate economies hit by the coronavirus, but that would undermine their currencies further. And interest payments on dollar-denominated debts has just soared, unbalancing finances.

The sterling fell more than 10 percent, a level last seen in 1985. The United Kingdom's divorce from the European Union has broken the resilience of the pound, which was considered to be tethered to the fortunes of the continent.

The best performing currency just happens to be the Argentine peso - best performing in the sense that it has fallen the least compared with other Latin American nations. The fact that it has introduced capital controls, limits to money flowing out of the country to tackle an economic crisis, has certainly helped.

The dollar has been the world's leading currency for more than a century. Today, more than 60 percent of all foreign bank reserves and 40 percent of all debt is held in US dollars.

Jameel Ahmad, the global head of currency strategy and market research at FXTM, tells Al Jazeera: "The dollar not only remains the king. If this was a game of thrones, the dollar is on the dying throne, it has been on the dying throne for an extremely long time, it dominates all of the seven kingdoms under it and this has been something that has been in play for close to a century now, since war times."

He adds: "And we are still 20-30 years away from anybody being able to say that they could challenge the dollar."

What went wrong at India's Yes Bank?
Even before the coronavirus pandemic, India's financial institutions were causing concern because of their large debts.

Yes Bank, the fourth-largest lender in India, was taken over by the government this month. That is the third rescue this year.

Darren Aw, Asia economist at Capital Economics, explains that Yes Bank has faced corporate governance issues, including risky lending practices that led to a buildup of nonperforming loans and a deterioration of the bank's position.

"India's banking sector has its share of problems and I don't think an issue like this would be easily eliminated," Aw says.

How will the pandemic reshape the travel industry?
The travel and tourism industry accounted for more than 10 percent of the global economy in 2018, creating 319 million jobs globally.

The industry was the first to face the brunt of the pandemic as travellers cancelled their bookings. The aviation industry is expected to lose more than $250bn in revenue this year, as airlines are forced to ground aircraft.

Avi Meir, chief executive of travel management startup TravelPerk, said many players in the airline industry "are looking at a total cancellation of most routes now".

Meir adds that many companies and suppliers have to change their business model or depend on a bailout.

Source: Al Jazeera News

 

[Song Hong]

USD is still the reserve currency. True. For a long time, maybe not.

Its the reverse. Covid 19 has proved that Dollar is king and will remain for a long time.

Pandemic proves there is only one world reserve currency
The mighty dollar shows reserve currency dominance. Plus, India's banking troubles and travel industry under COVID-19.

28 Mar 2020 14:34 GMT Business & Economy, Coronavirus pandemic, Banks

• 
• 
• 
• 

Rich nations have spent more than $9 trillion so far on tackling the economic fallout from COVID-19. And more spending is on the way as governments try to ensure there is a functioning economy post the pandemic.

The damage done is likely to surpass the financial crisis and maybe even the Great Depression.

It is the worst economic crisis in the last 70 years.

Now investors are rushing to safety. The 11-year bull run in US stock markets is over. And there is one safe haven everyone is banking on and it is not gold. It is the dollar. For all the talk that the dollar would lose its reserve currency status, it proved to be just that, talk.

Emerging markets have borne the brunt of the rush for dollars. Indonesia's rupiah lost almost 14 percent of its value since the beginning of the year. The Russian rouble and Mexican peso have lost a fifth of their value.

The problem for emerging markets is that they may want to cut interest rates to stimulate economies hit by the coronavirus, but that would undermine their currencies further. And interest payments on dollar-denominated debts has just soared, unbalancing finances.

The sterling fell more than 10 percent, a level last seen in 1985. The United Kingdom's divorce from the European Union has broken the resilience of the pound, which was considered to be tethered to the fortunes of the continent.

The best performing currency just happens to be the Argentine peso - best performing in the sense that it has fallen the least compared with other Latin American nations. The fact that it has introduced capital controls, limits to money flowing out of the country to tackle an economic crisis, has certainly helped.

The dollar has been the world's leading currency for more than a century. Today, more than 60 percent of all foreign bank reserves and 40 percent of all debt is held in US dollars.

Jameel Ahmad, the global head of currency strategy and market research at FXTM, tells Al Jazeera: "The dollar not only remains the king. If this was a game of thrones, the dollar is on the dying throne, it has been on the dying throne for an extremely long time, it dominates all of the seven kingdoms under it and this has been something that has been in play for close to a century now, since war times."

He adds: "And we are still 20-30 years away from anybody being able to say that they could challenge the dollar."

What went wrong at India's Yes Bank?
Even before the coronavirus pandemic, India's financial institutions were causing concern because of their large debts.

Yes Bank, the fourth-largest lender in India, was taken over by the government this month. That is the third rescue this year.

Darren Aw, Asia economist at Capital Economics, explains that Yes Bank has faced corporate governance issues, including risky lending practices that led to a buildup of nonperforming loans and a deterioration of the bank's position.

"India's banking sector has its share of problems and I don't think an issue like this would be easily eliminated," Aw says.

How will the pandemic reshape the travel industry?
The travel and tourism industry accounted for more than 10 percent of the global economy in 2018, creating 319 million jobs globally.

The industry was the first to face the brunt of the pandemic as travellers cancelled their bookings. The aviation industry is expected to lose more than $250bn in revenue this year, as airlines are forced to ground aircraft.

Avi Meir, chief executive of travel management startup TravelPerk, said many players in the airline industry "are looking at a total cancellation of most routes now".

Meir adds that many companies and suppliers have to change their business model or depend on a bailout.

Source: Al Jazeera News

 

[Faith_Lock]

Chinese currency, of any kind, cannot replace the dollar until China has a free market and allows foreign investment comparable to that allowed by the USA and Euro nations.

If what you said is true, why isn't Euros the world reserve currency? Clearly, something else is needed. What is it? (By the way, this question is not just for you, but also for anybody who is good in world finance).

 

[Song Hong]

USD still the reserve currency for now.

Euro is a confederate with economic unity but no political unity. It won't work.

If what you said is true, why isn't Euros the world reserve currency? Clearly, something else is needed. What is it? (By the way, this question is not just for you, but also for anybody who is good in world finance).