China Proposes Asian-Wide Digital Currency to Reduce Dependence on USD

China Proposes Asian-Wide Digital Currency to Reduce Dependence on USD

Chinese researchers have proposed the concept of an "Asian Yuan," a digital currency aimed at reducing Asia's dependence on the US dollar. This initiative, led by researchers from the Chinese Academy of Social Sciences (CASS), envisions a regional digital currency backed by distributed ledger technology (DLT).

How the Asian Yuan Would Work

The Asian Yuan would be a digital currency integrating 13 regional currencies, including those from the 10 member states of the Association of Southeast Asian Nations (ASEAN). Key currencies such as the Chinese Yuan, Japanese Yen, and South Korean Won would be part of this initiative. Similar to Central Bank Digital Currencies (CBDCs), the Asian Yuan would utilize DLT to facilitate secure and efficient transactions.

Significance of the Proposal

The proposal highlights the growing economic integration in East Asia, which has laid the groundwork for regional currency cooperation. The researchers emphasize that the conditions for establishing the Asian Yuan have gradually formed over the past two decades.

Related Developments

The suggestion of the Asian Yuan comes as China's digital currency, the e-CNY, gains traction. Recent data shows that the e-CNY has facilitated transactions worth $14 billion, with over 5.6 million merchant stores supporting the digital currency.

This initiative reflects China's broader strategy to enhance regional financial collaboration and reduce reliance on the US dollar. The proposal underscores the potential for digital currencies to reshape the global financial landscape.