China's digital currency

Will China be the first to issue a sovereign digital currency?
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China was the first major economy to begin exploring its own digital currency in 2014, though it is yet to launch the proposed digital yuan. Unlike cryptocurrencies such as bitcoin, which are not centrally controlled, China’s “sovereign” digital coin would fall under the authority of the People’s Bank of China. China maintains a blanket ban on the trading of any cryptocurrencies, as the government regards them as a source of financial risk.

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The shakeout in the cryptocurrency sector is prompting renewed questions about the foundations of the highly volatile digital asset market. Such assets were never meant to be a hedge against inflation, and the end of an era of cheap money has accentuated their long-standing weaknesses.
These CBCDs, which will soon include the Russian rouble, are likely to finance a good deal more bilateral trade, thus weakening the US dollar’s role in trade. While the dollar will still carry weight as a transaction currency in which countries invest their international reserves, the balance of power seems destined to shift.
China’s digital payment market is big enough for the e-CNY, Alipay and WeChat Pay to survive and thrive alongside one another. The digital currency will benefit from more visibility while payment platforms will benefit from the additional payment flows generated.
A bill being prepared for the Legislative Council that is expected to bar retail investors from trading such currencies is both timely and welcome.
Country is at the head of what is likely to be a global trend as governments around the world are engaged in a contest to digitise their currencies
Getting to grips with technology requires understanding, experience and confidence, especially for the elderly and less tech-capable. The shift will take time, effort and trained staff.
ETFs can greatly magnify the money that bitcoin can lure – and the financial risks. Regulation is urgent, as is the launch of stable central bank digital currencies such as the digital yuan.
Stablecoins could support competition in payments, deploying technology and innovation to reduce cost and offer new services. But when used at scale as a means of payment, they can present material risks to the financial system.
Are cryptocurrencies dirty or clean? Neil Newman looks at the polluting nature of Bitcoin mining.
The breaking up of a massive money-laundering syndicate by Hong Kong customs shows cryptocurrency crooks are on the rise and authorities should always be alert.
Digital currencies issued by central banks could be the answer, writes Neil Newman.
The restricted use and security risks of bitcoin and other cryptocurrencies make them a poor alternative to traditional currencies, even if they could overcome widespread official disapproval. Central bank digital currencies, on the other hand, can help speed up transactions, reduce costs and improve security.
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