Digital yuan ‘no threat to US dollar, Bank of Japan official says

A senior executive at the Bank of Japan has said China’s forthcoming digital currency does not pose a threat to the status of the U.S. dollar as the global reserve currency, according to reports.

Head of payments for the Bank of Japan, Kazushige Kamiyama, was quoted by Bloomberg saying the rollout could even strengthen the dollar’s advantage as the world reserve currency.

“The dollar’s status as the key global currency won’t change so easily. In fact, the dollar’s advantage may strengthen further if the U.S. goes with digitalization.”

The comments follow reports suggesting President Joe Biden’s administration has expressed concern about the possible long-term effects from a Chinese digital currency on the global monetary system.

Officials in the U.S. are reportedly scaling up research efforts into China’s digital yuan, its methods for distribution, and the possible impact of a widespread launch on trade sanctions currently in force against China.

A number of U.S. departments are said to be unconcerned about the rollout. However, with China advancing towards a more widespread launch, recent reports in Bloomberg have suggested views may be starting to harden.

While there are plans under deliberation for central bank digital currencies across the majority of global reserve banks, the pace of China’s progress is increasingly attracting the attention of officials across major Western economies.

China is at an advanced stage of the development of its digital currency, ahead of many other leading global central banks. The People’s Bank of China has already staged several significant pilot schemes using the digital currency in real-world settings, and is preparing for further stage tests in the weeks and months to come.

The comments from the Bank of Japan come after it announced it would begin experiments with its own central bank digital currency earlier this month.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

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