Chinese Min min bank released a white paper on the "Research and Development Progress of China's Digital Yuan" on the 16th, which disclosed the research and development of the digital yuan for the first time. An observation report published on July 19 on the website of Hong Kong's Asia Times believes that the internationalization of the renminbi will usher in a real inflection point. The full text is excerpted below:
When economic historians review the exact inflection point at which the renminbi truly internationalized, July 2021 may be specifically mentioned.
On July 16, we learned that Chinese Bank is exploring cross-border payments in digital yuan. Central bankers have been quietly working to introduce the first electronic currency backed by the governments of a major economy.
It is widely believed that Beijing intends to launch a digital yuan in due course to catch up with the February 2022 Winter Olympics, thus making it a limited use in the Winter Olympic scenario. Recent new developments clearly have the characteristics of real-world scenario experiments.
Creating the conditions for cross-border digital payments means that fuller RMB convertibility has the potential to become a reality.
At the same time, the central government looks set to give Shanghai local officials broader freedom to develop local regulations as well as design tax incentives and move to liberalize capital markets. The latter move could mean that new key industries — from semiconductors and biotechnology to aviation and artificial intelligence — will enjoy a corporate tax rate of 15 percent, far below the regular tax rate of 25 percent.
This move could boost the confidence of local business people, entrepreneurs and foreign investors. By turning Shanghai into a giant corporate special zone, it could also create a new model that can be rolled out to major cities in other provinces.
These initiatives will be important for China's evolving status as a global financial power.
The intentions being conveyed in July 2021 could well be a disruptive factor.
China's determination to take the lead in rolling out a central bank digital currency will catch officials who are napping off guard at the Federal Reserve, the European Central Bank and the Bank of Japan. It would also allow China's central bank officials, as well as top leaders, to exert enormous influence in rewriting the rules of future currencies.
In 2016, China earned the renminbi a spot in the IMF's SDR basket, bringing it into the ranks of the dollar, euro, yen and pound.
Now, by enabling digital currencies before Washington, China is finally leading the way.
Josh Lipsky, who runs a digital currency tracking project at the Atlantic Council, said: "The dollar is not in danger of losing its status as a global reserve currency in the near future. But if the digital yuan blossoms everywhere... It could slowly weaken the dollar's influence, appeal, and use in sanctions. ”
Mark Sobel, a former senior U.S. Treasury official at the Center for Strategic and International Studies, said China's central bank has a capable and broad-minded workforce.
Source: Reference News Network