Matthew Graham, CEO of Sino Global Capital, views China's digital yuan as a way to undermine American dominance in global finance. He told Boxmining founder Michael Gu that the currency targets the US
Matthew Graham, CEO of Sino Global Capital, views China's digital yuan as a way to undermine American dominance in global finance. He told Boxmining founder Michael Gu that the currency targets the USD's stranglehold on international payments, not Bitcoin or cryptocurrency broadly. China plans to roll out its central bank digital currency, or CBDC, over the coming years.
Graham laid out the problem with current systems: "Swift, CHIPS, Fedwire (…) they're antiquated, they're expensive, they're slow. It's 2020 and we have transactions that take three days to clear and that are far more expensive than they should be. All of these technologies that underpin much of the USD-centric global economy are really showing their age. So that's a big opportunity."
The dollar-based financial infrastructure dominated for decades without rivals. SWIFT operates without challengers and has little incentive to change. SWIFT is a digital system that takes days to move money between nations.
China's Digital Currency Electronic Payment, or DCEP, would settle transactions faster while bypassing the entire Western financial system. Graham cautioned against viewing it through a crypto lens. "If you're approaching this from a crypto or blockchain framework, I think you're going to really have a hard time understanding what it is and what and why it's so important," he said.
The chairman of the China International Economic Exchange Center highlighted another advantage: "DCEP can achieve real-time collection of data related to money creation, bookkeeping, etc, providing a useful reference for the provision of money and the implementation of monetary policies."
The implications stretch beyond banking. China and America are clashing over trade, Taiwan, Hong Kong, and pandemic response. If such a system gains traction, it becomes another arena for US-China rivalry.
Whether other nations will adopt the digital yuan is the central question. Countries dependent on Chinese financing may feel pressed to accept it. But major economic blocs like the European Union show no signs of abandoning the dollar system for Beijing's alternative.
