It could be troublesome if the US continues to lag in CBDC adoption
Press Release

It could be troublesome if the US continues to lag in CBDC adoption

written by John Murphy | March 2, 2023

Who knew that a China-led CBDC movement could stir problems for US dollars? Furthermore, it could be troublesome if the US continues to lag in CBDC adoption.

According to a CIA analyst, Yaya Fanusie, who is also a cryptocurrency researcher. If the United States delayed its commencement of Central Bank Digital Currency (CBDC) there is a high possibility that the US will end up losing its credibility in the financial world.

Yaya Fanusie is also the policy head at the crypto council for innovation. On Feb 28, as the head of the crypto advocacy group, he explained his statement in an interview with Bloomberg. He articulated that the sanctioned countries are looking for financial systems that are not under the control of the U.S. They want systems that are not heavily influenced by the United States so as to facilitate cross-border funds transfers.

Fanusie suggested that the world is widely adapting government-issued CBDCs into their financial systems. Regardless, if the U.S. does not develop much influence on these new currencies, it might affect the country’s ability to meet political goals. Moreover, it could also lead to geopolitical implications in the long run.

“The potency of our sanctions power comes from the centrality of the U.S. to the financial global infrastructure. So if that shifts a little bit, it doesn’t mean that China is going to take over or that the yuan is going to displace the dollar but if there’s a viable new rail where sanctioned actors can now transact, that’s trouble.”

The U.S. Federal Reserve has also started working on creating its own CBDC known as the digital dollar project. However, it still awaits approval from the U.S. government.

China has already taken advantage of this. They have been exploring CBDCs since 2014. On Jan 24, 2022, they even started piloting their digital currency yuan. Additionally, according to Fanusie, it has already processed millions of transactions.

Fanusie also highlighted that China is also piloting the smart contract with these digital currencies and is helping other countries to adopt it as well. He said that there is a race going on among governments in CBDC adoption like China and U.S. But commentators think that China is not actually looking to compete with the U.S. in this. They are merely looking for public dominance.

CBDCs on state-controlled ledgers are easier to control than decentralized public networks such as Ethereum and Bitcoin. However, the opponents of CBDCs believe the only purpose of states for adopting CBDCs is to gain financial control over their citizens.