The Asean Financial Innovation Network – founded by the Monetary Authority of Singapore, the International Finance Corporation and the Asean Bankers Association – also said last week it is set to launch a digital currency sandbox to enable banks and fintech companies to test CBDC applications for multicurrency payment systems.
When China’s digital currency is fully-operational and other countries have their own, foreign currency exchanges are expected to be much faster and more efficient than bank wires.
But for widespread circulation of the digital yuan, Asian central banks and the People‘s Bank of China would both need to accept its cross-border usage.
“If the digital yuan becomes so convenient, being accepted at 7-11s and other businesses in Thailand, then why would I carry around hard cash in Thai baht?” said John Keh, chief marketing officer of Genesis Block, a digital asset trading centre in Hong Kong.
Keh said it would only be possible to prevent the digital yuan from gaining a domestic foothold if the Bank of Thailand restricted access to certain transactions.
The risk of currency substitution is typically more pronounced in countries with historically high inflation or a lack of trust in the nation’s monetary system, the BIS said.
Read more: https://www.scmp.com/economy/china-economy/article/3138622/china-digital-currency-could-beijings-advanced-e-yuan-replace