Billionaire Ray Dalio Believes Digital Yuan Could Become Global Reserve Currency; Could work on Ethereum
According to billionaire investor Ray Dalio, the race for CBDCs seems to be heating up and China could come out on top.
The digital yuan will overtake the digital dollar
Bridgewater Associates founder Ray Dalio pointed out that the Chinese digital yuan could pose a threat to the continued dominance of the US dollar in the global market.
Speaking on CNBC’s Managing Asia, the US investor noted that China is clearly at the forefront with its digital yuan program against the US, which is still in consultation.
This delay in the world’s largest economy could allow the digital version of its Asian nation’s fiat to become more competitive than a potential digital dollar.
According to Dalio, the United States will launch a digital dollar, but it will not be the most competitive digital currency given the growing level of debt in the United States. However, he stressed that it will still be viable given the position of the United States as a market leader.
When it comes to the Chinese digital yuan, Dalio said it would be the most competitive given its price and return on investment. He also stressed that the digital yuan would be a viable alternative to the dollar if it enjoyed international acceptance and came with attractive interest rates.
CBDCs, the short form of central bank digital currencies, have been in fashion since the beginning of the era of decentralization with Bitcoin. BTC -1.71% Bitcoin / USD BTCUSD 36 $ 187.51
-618.81-1.71% Volume 33.08b Variation -618.81 $ Open 36,187.51 Circulation 18.72m Market capitalization 677.57b 5 min Billionaire Ray Dalio thinks the digital yuan could become the world reserve currency; Could run on Ethereum 28 mins China’s regulatory crackdown focused on high-leverage derivatives trading 2 hrs Rising popularity of cryptocurrencies is “a big concern”, says Irish central banker
These are digital versions backed by a country’s fiat state and are usually issued by the umbrella bank. The majority of national banks have launched independent CBDC programs to switch to a digital economy.
Even some small countries have launched a digital version of their currency, but China has caught the world’s attention given the implication of its program.
The digital yuan, which began six years ago, has been called a “threat” by financial experts to the US dollar’s position as the world’s reserve currency. Dalio points to a potential greenback reversal.
Data from the International Monetary Fund (IMF) puts China 2% behind the pound, euro and Japanese yen. The United States is in the lead with 60%, and Dalio says it shouldn’t be long.
According to the American investor, the Chinese digital yuan could reach 10 and 15% in the coming years.
China is set to launch its digital yuan, with pilot tests underway in its major cities. The upcoming Beijing Olympics have been chosen as the official wholesale launch.
The US Federal Reserve is just taking the signal, and Fed boss Jerome Powell has announced plans to release a discussion paper on the likely impact of a CBDC in the country.
Smart contracts compatible with CBDCs
China plans to launch a digital yuan and make it “smart” over time, according to reports from Sina Finance. This is stated by director of the Science and Technology Supervision Bureau of China’s Regulatory Commission Yao Qian.
Speaking at the 2021 International Finance Forum, Qian said domestic banks should not only aim to launch digital versions of their currencies, but also add smart contract functionality. This will allow it to run on the Ethereum blockchain. ETH -1.63% Ethereum / USD ETHUSD $ 2,557.92
-41.69-1.63% Volume 27.11b Change -41.69 $ Open $ 2,557.92 Outstanding 116.11m Market cap 297.01b 5 min Billionaire Ray Dalio thinks digital yuan could become the world’s reserve currency; Could run on 4h Ethereum Holders of Ethereum (ETH) would increase by 8.16 million despite the 60% trend reversal of the 4h draw? First “10-day Bitcoin & Ether performance” to reveal what lies ahead
However, Qian advises against rushing things given the challenges inherent in smart contracts, as the industry is still young. He said the best approach would be to start with a simple and smart contract and then build more complex ones as the security and legality become clearer.
Jimmy has been following blockchain development for several years, and he is optimistic about its potential to democratize the financial system. When not immersed in the daily events of the crypto scene, he can be found watching legal reruns or trying to beat his best score on Scrabble.