China proposes issuing an Asian Yuan as it wants to reduce dependency on the US dollar. Even though the US is in a recession right now, USD stands strong and is considered to be a global currency. A lot of Asian countries are also very dependent on the US dollar for international trade. But any kind of dependency only brings problems. Like for Russia, their forex accounts have been restricted by the US, and sanctions have been imposed.
China seeks to eliminate economic vulnerability by launching an Asian Yuan
China, one of the most powerful and well-developed nations, is also dependent on the US dollar for trade. But they know, this puts them on the back foot against the United States. So, China wants to bring another currency that will facilitate trade in Asian countries seamlessly. And this means there will be no need for the US dollar.
Researchers from China said that they think distributed ledger tech could be used to back the Asian Yuan. The token would be pegged to 13 currencies, out of which 10 currencies are of nations that are part of the ASEAN (Association of Southeast Asian Nations). These nations are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. While the other 3 would be Japanese Yen, Chinese Yuan and South Korean won.
The researchers believe that now is the right time to launch the currency. With so much adoption of blockchain technology, it does make sense that a blockchain-based currency would massively benefit all Asian countries.
China’s CBDC project is a success
China is one of the first countries to have successfully implemented the pilot stage of its central bank digital currency. At present, the transaction amount using their CBDC has surpassed $100 billion Yuan, and it is now accepted at 5.6 million merchant stores across the nation. China has even worked with the Bank for International Settlements (BIS) and has successfully completed a pilot for the cross-border use of central bank digital currencies. The total transaction volume for the same in a month was $22 million.