Dear Chuck,
I read your new book on economic threats. What do you think of Chinaâs new digital currency? Isnât it a threat that should be on your list of Gray Swans?Â
Economic Observer
(Courtesy of Christian Economic Forum)
I wrote a book about Seven Gray Swansâtrends that threaten our financial future which are low probability occurrences that we tend to ignore. As I mentioned in the book, my list is not exhaustive. Thank you for reading the book; unfortunately, many of the events I described are rapidly developing. While I did not mention a specific threat of China, I did reference their social scoring system, and my book was released before they introduced their new digital currency. I will address your specific concerns and the advancements in their social scoring technology.Â
China’s digital currency won’t topple US dollar ‘so easily’, senior Bank of Japan official says
People’s Bank of China (PBOC) has moved closer to becoming the first major central bank to launch a virtual currency with a series of trials
Biden administration is increasing its scrutiny of China’s progress toward a digital yuan amid concern it could kick off a long-term bid to displace the US dollar
Six more regions, including Shanghai and Hainan, have been added to China’s digital currency pilot programme
China has been a forerunner in developing a central bank digital currency, with cross-border testing also under way
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China’s sovereign digital currency is still in the testing phase, but has caused speculation about what effect it will have on fintech. Some experts have asserted that the digital currency will crowd out payment methods WeChat Pay and Alipay. Others have stated that China’s sovereign digital currency will boost the fintech industry overall since it is electronic. So, how can we reasonably predict will the effect of the digital currency will be on China’s fintech industry?
First, we look at payment methods WeChat Pay and Alipay. China is already becoming an increasingly cashless society, one in which four out of five payments are cashless. Use of the digital currency will further this trend. The digital currency will be usable through WeChat Pay and Alipay and other digital payment methods, and regulators have stated that the sovereign digital currency is not meant to replace these payment channels. However, because the use of the sovereign digital currency neces
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After a period of rapid growth, strong fintech regulation is on the rise in China. The scale of third-party payments has increased from 13 trillion RMB in 2013 to 300 trillion RMB in 2019, while internet wealth management has grown from less than 1 trillion RMB in 2013 to over 5.5 trillion RMB in 2018. However, some fintech firms have engaged in improper activities, using financial instruments such as P2P lending, microfinance, and asset-backed securities. This has allowed them to achieve excessive leverage or even fraud, creating systemic risks. Indeed, China’s 2020 Government Work Report stated that the supervision of fintech firms is necessary to ensure that innovation occurs under proper regulation.