The Independent Strategy president and global strategist David Roche stated that China’s digital yuan had “a long way” to travel before reaching a point where it can fiercely challenge the USD dominance.
Hypothetically, China’s CBDC (digital yuan) could outwit the U.S. dollar (USD) as the world’s reserve currency, but after a ‘very, very long time.’ According to the strategist, before a currency achieves reserve status, a couple of ‘almost abstract’ conditions should be met, including having a system that is not so much leveraged. The Chinese yuan takes far less international trade settlements portion — that is only 2% compared to the euro, which occupies nearly 18%–20% of all the trade.
Roche reportedly stated the following:
“Dethroning the dollar — which the euro tried to do, and settled at a miserable 18–20% of all the international things that go on — is very, very difficult. […] There is a certain amount of illusion at the moment that the yuan — which accounts for 2% of international trade settlements and even less if you come to financial investment flows — that this can take over.”
He doesn’t believe yet that the People’s Bank of China‘s digital currency has the ‘magic potion’ that is able to topple the greenback off its world’s reserve currency position. The digital yuan, the country’s central bank controlled currency, is China’s effort in the quest to become a cashless society.