February 03, 2021
Post-Pandemic Tourism Could Boost China’s New Digital Currency
China finds itself in a strong position to release its central bank digital currency, the eCNY, following successful trials. The completion of the eCNY trials coincides with the rollout of the Covid-19 vaccine, and now that countries can ease travel restrictions and the hard-hit tourism industry can recover, China’s outbound tourism could become a catalyst for the global usage of the eCNY. This could become a defining moment for the internationalization of China’s currency, the renminbi, with a small chance of strengthening it enough to even begin challenging the U.S. dollar as the top global currency.
This could become a defining moment for the internationalization of China’s currency, the renminbi.
Since the 2008 Global Financial Crisis, China has worked to increase the overseas usage of the renminbi, especially as a means of challenging the dollar’s dominant position in international trade and finance. Despite consistently promoting the renminbi, China has faced significant hurdles in internationalization, particularly because of its strict currency controls. Importantly, the trade financing of Asian supply chains remains mostly in dollars, comprising approximately 80 percent of Asian banks’ international activities in the third quarter of 2019.
Meanwhile, to bolster China’s already strong currency regulation, the People’s Bank of China (PBoC, China’s central bank) developed the eCNY. Due to the PBoC’s oversight of the eCNY, it has the power to both monitor macroeconomic trends and manage the renminbi more directly.
Read the full article from The National Interest.
More from CNAS
-
Commerce's Role in Economic Security with Deputy Secretary Don Graves
Podcast
Deputy Secretary Don Graves joins Emily to talk about the national security mission of the Department of Commerce and to unveil Commerce’s national security strategy. Read th...
By Emily Kilcrease & Geoffrey Gertz
-
Our Man in Damascus? Sanctions and Governance in Post-Assad Syria
Commentary
The complexity of the legal and policy issues presented by the sanctions thicket surrounding Syria—and the disparate authorities responsible for various parts of it—will requi...
By Alex Zerden
-
Ziemba: Russia & Iran Concentrating on Own Battles
Video
The rebel-led alliance in Syria is set to form a transitional government, after overthrowing President Bashar Al Assad. Reports say the reason the Assad regime fell so quickly...
By Rachel Ziemba
-
Sharper: Tariffs
Commentary
The incoming Trump administration has signaled that tariffs will be a central pillar of its economic strategy, with significant implications for international trade, the Ameri...
By Eleanor Hume, Charles Horn & Gwendolyn Nowaczyk
