Billionaire Ray Dalio Believes Digital Yuan Could Become Global Reserve Currency; Could Run on Ethereum
According to billionaire investor Ray Dalio, the CBDC race seems to be heating up, and China may emerge a winner.
Digital Yuan To Outpace Digital Dollar
Bridgewater Associates founder Ray Dalio pointed out that China’s digital yuan could serve as a threat to the continued dominance of the US dollar in the global marketplace.
This delay by the world’s largest economy could enable the Asian nation’s digital version of its fiat to become more competitive than a potential digital dollar.
According to Dalio, the US will launch a digital dollar, but it will not be the most competitive digital currency given the US rising debt level. However, he pointed out that it will still be viable given the US position as a market leader.
Earmarking China’s digital yuan, Dalio said it would be the most competitive given its pricing and return on investment. He also pointed out that the digital yuan would be a viable alternative to the dollar if it enjoys international acceptance and comes with attractive interest rates.
CBDCs, short form for central bank digital currencies, have been the rave ever since the decentralization era began with Bitcoin. BTC -2.15% Bitcoin / USD BTCUSD $ 36,184.17
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They are state-backed digital versions of a country’s fiat and are usually issued by the apex bank. The majority of national banks have launched independent CBDC programs in pivoting to a digital economy.
The digital yuan, which started six years ago, has been labeled a ‘threat’ by financial experts to the US dollar’s position as the world’s reserve currency. Dalio points to a potential toppling of the greenback.
The International Monetary Fund (IMF) data puts China at 2% behind the Pound, Euro, and the Japanese Yen. The US leads with 60%, and Dalio says this may not be for long.
According to the American investor, China’s digital yuan could scale up to 10 and 15% in the next couple of years.
China is close to launching its digital yuan, with pilot tests presently ongoing in its major cities. The forthcoming Olympics in Beijing has been chosen as the official wholesale launch.
Smart Contracts Compatible With CBDCs
China is planning to launch a digital yuan and make them ‘smart’ with time, per reports from Sina Finance. This is according to the director of the Science and Technology Supervision Bureau of China’s regulatory commission Yao Qian.
Speaking at the International Finance Forum 2021, Qian said that national banks should not only aim to launch digital versions of their currencies but add smart contract functionality. This will enable it to run on the Ethereum blockchain. ETH -2.41% Ethereum / USD ETHUSD $ 2,558.41
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However, Qian advises that this should not be rushed given the inherent challenges smart contracts come with as the industry is still young. He said that the best approach would be to start with a simple, smart contract and then build more complex ones as security and legality become clearer.
This article is Originally posted on CoinCentral.com
Author: Jimmy Aki