Recently, screenshots of the online wallet show that the Central Bank of China's Digital Yuan (DCEP) has now started internal testing at the Agricultural Bank of China. When the news came out, it not only attracted competing reports from domestic mainstream financial media, but also shocked foreign media. Forbes, TADVISER, CNN and other mainstream media all commented. They generally believe that the DCEP of the People's Bank of China will challenge the US monetary system.


Central bank digital currency, end dollar hegemony?
Forbes of the United States pointed out that the ultimate goal of China's blockchain plan is to make the People's Bank of China and large Chinese companies such as Tencent, Huawei, Baidu and Ant Financial become world leaders in new payment infrastructures with unique functions To undermine the important position of the United States. With the introduction of digital currency electronic payment (DCEP) and the establishment of China's blockchain technology standards, it will help to adopt and expand the technology faster. China is making tremendous progress in promoting the development of blockchain technology. Together with 5G, artificial intelligence and the Internet of Things, it will become another major technical pillar. Its initiatives aim to provide new ways to handle large amounts of payments, communications and high storage availability, and it appears to be being implemented on a large scale in a professional and effective manner. Soon China will have the largest real-time blockchain infrastructure, and the Western world needs attention.
TADVISER reported that China hopes that the issuance of cryptocurrencies will allow the renminbi to expel the US dollar from the electronic payment market and undermine its dominance. And China is only half a step away from the large-scale issuance of digital RMB, and the US government has lost the opportunity to become a pioneer in the development of the national digital currency. The Ledger Insights publication confirms this: when it mentions the Chinese media, it writes that by the middle of April 2020, the central bank ’s test of the renminbi has almost been completed, and China only needs to modify the relevant regulations to launch it.
TADVISER also pointed out that DCEP may be the only tool for Chinese citizens to buy other cryptocurrencies, and its cryptocurrency exchanges can obtain formal trade status in Middle Eastern countries. And the report also mentioned that in April 2020, a technical committee composed of 15 organizations in China was established to formulate national standards for blockchain and distributed ledger technology (DLT).
In addition, blockchain media AMBcrypto also claimed that the purpose of China's launch of DCEP is to eliminate dollar hegemony. Because since 2018, the tension between China and the United States has been increasing. The US President set higher tariffs and trade barriers against China to force China to change its "unfair trade practices." And the US dollar has always been an indispensable currency in global financing and has been widely used for international payments. Abacus also believes that the US dollar gives the United States even more power than powerful military power.
Nonetheless, the US government cannot see the demand for digital currency for the time being. In a letter from Jerome Powell, chairman of the Federal Reserve, he believes that many of the challenges that digital currency intends to solve are not applicable to the United States. He believes that the US payment industry is already highly competitive and innovative, providing consumers with many digital payment options, and tracking digital payments for each payment is not attractive to the United States.

Under the new crown virus crisis, DCEP may occupy the leading position in international finance
Like the 2008 financial crisis, the domino effect of the new crown virus exposed the flaws of the financial system. The panic in the market has prompted central banks to take unprecedented monetary stimulus measures, and a vicious cycle of competitive currency devaluation will follow. US Fortune magazine (Fortune) believes that the tension caused by the new crown virus will stimulate people's demand for changes in the international financial system, and will test people's confidence in the US dollar as a global reserve currency. Other currency issuers (including the government and new non-state currency providers) have the opportunity to take action to fill this gap, they will take away the huge dominance of the US dollar in international trade and financial transactions.
In this increasingly multi-polarized financial system, currency digitization may be the most important factor for economic success. FORTUNE said that China is winning the battle of digital currencies at a long distance. If the United States cannot catch up quickly, it will lose this. war.
Coincidentally, CNN-NEWS18 wrote that with the resurgence of the world economic crisis under the coronavirus, China's successful digital currency experiment has already surpassed the United States.

China's victory in the digital currency competition will have a variety of negative effects on American and Western capitalism. If foreign companies can bypass Bank of America, Washington will lose its unique power to impose sanctions on other countries. Moreover, if they no longer face exchange rate risk, foreign central banks will not need to use U.S. dollar reserves to support their currencies, thereby reducing demand for US government bonds. This will lead to higher interest rates on the federal government, commercial loans, mortgages, credit cards, and all other forms of US borrowing.
On the other hand, due to China ’s universal application of cashless payment, it has a significant advantage in promoting central bank digital currency, and uses DCEP through mobile wallets to connect people along the “Belt and Road” in China, completely bypassing existing Financial infrastructure and provide opportunities for people without bank accounts to pay for online shopping and build savings. Or by linking the value of the national currency to DCEP, it will enable the governments of allied countries such as Africa to "monetize" their currency systems.
The goal of DCEP is to defeat competitor Libra
There is another view that China ’s goal in releasing DCEP is to defeat competitors such as Facebook Libra. The BOXMINING columnist wrote: China made it clear that Facebook Libra poses a threat to China ’s sovereignty and insists that digital currencies should only be issued by the government and the central bank, so efforts are being made to accelerate the launch of DCEP, and China is likely to surpass Libra ’s threat .