The president and global strategist at Independent Strategy, David Roche, believes that China’s digital yuan has “a long way” before it’ll become ready to challenge the USD as a reserve currency, CNBC reports earlier on 2nd Nov.
In line with Roche, China’s CBDC, could hypothetically beat the USD as a reserve currency, but it might take a “very, very while.” The strategist reportedly emphasized that the euro accounts for a “miserable” 18%–20% of all international trade, while the Chinese yuan composes 2% of international trade settlements. While explaining further, he added:
“Dethroning the dollar – which the euro tried to do, and settled at a miserable 18–20% of all the global things that continue – is extremely, very difficult. […] there’s a particular amount of illusion at the instant that the yuan — which accounts for two of international trade settlements and even less if you come to financial investment flows — that this will take over.”
Roche also stressed that the United States economy has been shrinking within the past 20 years. However, the dollar is an “increasing proportion of the settlement of international trade and a good bigger proportion of monetary reserves,” the strategist added.
Roche’s remarks come shortly after Jerome Powell – the U.S. Federal Reserve’s chairman – declared that the U.S. government isn’t worried about China getting the first-mover advantage when it involves issuing CBDCs. consistent with the official, the U.S. is going to be focused on “getting it right” instead of trying to be first with CBDC.
In the same period, a variety of industry experts expressed concerns over the USD being in danger of losing its status if its digital version doesn’t launch soon. Also earlier in October last year, Christopher Giancarlo, former chair of the CFTC [Commodity Futures Trading Commission], argued that the dollar could lose status within the future due to other countries actively experimenting with CBDCs.
Earlier on 20th Oct., Anthony Pompliano, a co-founder of major cryptocurrency firm Morgan Creek Digital, argued that the United States is eventually going to fall “really far behind China” if the country keeps delaying its digital dollar initiative.