SEC Commissioner Hester Peirce stated the planned digital yuan will not eclipse the dollar. She cited the growth of stablecoins backed by the greenback.
As the interest in digital currency grows, we are starting to see some really big names jump into the fray. The People’s Bank of China is one such name throwing its hat into the ring and releasing a digital currency. The goal is ostensibly to improve payment systems and preempt the ascension of cryptocurrencies.
China is close to launching the e-yuan
The Chinese digital yuan has been the big water cooler topic of choice this month. China has officially confirmed the central bank-backed digital currency was already being beta tested in cities across the country.
Several entities in the U.S. government are looking closely into the digital yuan to assess its possible threat to the dollar.
A former official of the People’s Bank of China, Zhou Xiaochuan, tried to reassure these concerned parties by stating the e-yuan would be only used domestically. Zhou claimed that employing the e-yuan as a global reserve currency would not only be impractical but bring with it negative consequences.
The project by the PBOC is apparently part of a push to globalize the yuan. China is already leaps and bounds ahead of most other countries in their drive toward digitization. The pace which China has set here is worrying some analysts about the possibility of the second-largest economy gaining dominance over the dollar.
SEC official says not to worry
Peirce released a statement to help put worried minds at ease. Peirce, aka Crypto Mom, claims the rise of stablecoins would be the key to maintaining the U.S. currency status atop the world’s economic food chain. Peirce said:
“Even in 2021, there’s been a tremendous growth in stablecoins — these are essentially private digital dollars. That, effectively, may be our answer to the Chinese CBDC. It may be just private stablecoins. If they’re dollar-backed, then I think that the dollar will still be quite relevant.”
In a separate statement, Federal Reserve Chair Jerome Powell stated that China’s plans for a digital yuan would in no way push the Federal Reserve to rush out a digital dollar. He made it clear that the goal was not to be first to launch but to avoid any mistakes in creating a digital dollar.