China changed the US dollar with the digital yuan

The Celestial Empire has been steadily reducing its dependence on the US dollar. Beijing may reduce its participation in US government bonds, dropping this figure from the current level of $1 trillion to $800 billion, according to estimates by the local news source Global Times.

Dollar good bye

The unprecedented injection of liquidity into the financial system continues to be a key factor behind this trend. In an attempt to support the global economy, the authorities of different countries are printing money non-stop, continuing to devalue it.

The recent announcements by the US Federal Reserve added fuel to the fire. The American regulator announced a policy update, according to which the Fed will allow inflation to exceed the target. This further heightened investor fears about an imminent rise in inflation.

In addition, the escalation of political tensions between the United States and China played a role, the newspaper adds.

China is currently the world’s second largest holder of US debt. However, in recent years, China has been steadily reducing its stake in US Treasury bonds. In the first half of 2020 alone, the volume of their sales in China amounted to about $106 billion.

According to the publication, Shanghai University professor Xi Junyang believes that in the future China will reduce the amount of Treasuries in its possession from $ 1 trillion to $ 800 billion. However, he adds, it will be possible to talk about aggressive bond sales only in case of an emergency, for example conflict.

The rise of the yuan

Well-known Bitcoin critic Peter Schiff is of the same opinion. Commenting on the article, he tweeted:
“It seems to me that China will reduce this figure much more. And, probably, other states will do the same”.

This news from the Middle Kingdom serves as another reminder of the seriousness of Beijing’s intentions to jump off the dollar needle and challenge the USD’s global hegemony. China intends to make its own national digital currency, Digital Currency Electronic Payment (DCEP), its main weapon in this battle.

It is expected that the digital currency issued by the national Central Bank of the PRC will increase the availability of the yuan around the world, as well as ensure a more active transition of foreign trade processes to the digital ecosystem.

At the moment, China’s digital currency is in the final stages of beta testing.

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