Chinese state researchers proposed developing a “pan-Asian digital currency” to improve regional monetary cooperation and reduce dependency on the US dollar. As published by China Macro Economy; Song Shuang, Liu Dongmin, and Zhou Xuezhi of the Chinese Academy of Social Sciences’ Institute of World Economics and Politics advocated the creation of an “Asian yuan.” 

According to the experts, the primary goal of the new digital currency is to lessen the Association of Southeast Asian Nations (ASEAN) dependency on the US dollar and promote financial stability in the region. The digital token will be pegged to a basket of 13 currencies from ASEAN member nations. The Chinese Ministry of Foreign Affairs first proposed the “pan-Asian digital money” in a journal published in the economic magazine World Affairs in August of this year. It was only recently that it became publicly available.

 According to the publication, the “Asian yuan” would be built on distributed ledger technology (DLT), which would prevent any single country from dominating the market and remove barriers to regional monetary cooperation. China will spearhead the development of the pan-Asian digital token. This decision is based on the PRC government’s success in evaluating the Chinese central bank’s digital currency (e-CNY), and the country’s status as the world’s second-largest economy.

The publication also suggests establishing a separate department inside the Asean+3 Macroeconomic Research Office (AMRO) to manage the deployment of the “Asian yuan,” which would subsequently be elevated to the Asian Monetary Fund. 

The researchers recommend that cross-border transfers between central banks, government enterprises, and significant commercial banks in partner nations be used to test the new digital currency. Payments will be possible under the trial project in commodities trading, overseas investment, government aid, and bond issuance. 

Digital Currencies, CBDCs, Are Not The Most Popular Idea

While China seeks to reduce the influence of the US dollar on Asian economies, authorities in other countries seek to prevent the widespread adoption of the digital yuan in their own regions. Andrew Bragg, a New South Wales senator, has drafted a bill to regulate the country’s cryptocurrency business. The senator suggests under the new cryptocurrency law to “prepare the country for the widespread use of the digital yuan.” 

Bragg recommends stringent reporting criteria for institutions that may be allowed to offer e-CNY in Australia. The senator singled out seven Chinese banks with Australian operations that may enable the usage of the digital yuan in the country. The law imposes obligations on various banks, including the publication of information such as:

 ● The number of Australian businesses that have accepted digital yuan payments;

 ● The total amount of e-CNY kept in Australian clients’ digital wallets; 

 ● Information on all e-CNY-related transactions and activities by Chinese financial institutions operating within Australia.

Individuals or businesses who breach the reporting requirements would face penalties under the law. The bill’s primary goal is to restrict the extensive use of Chinese CBDC in Australia. Using the e-CNY outside of China, according to Bragg, could provide the state “enormous power, economic and strategic power,” thus undermining the benefits of Australia’s CBDC. As a reminder, the Australian central bank launched a digital currency pilot in August of this year to investigate the use and potential economic advantages of CBDC.

Australia isn’t the only country concerned over the growing popularity of CBDCs in the east, as the United States is racing to develop its own digital currency. Read more about CBDCs in general here and make sure to check out the following articles: SMS Bitcoin Transactions, Is Uphold Safe in 2022, or How to Research Digital Assets.

Check out the home page of Exploring Digital Assets for even more insights, news and reports.

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