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Finance & Economy

China joins Russia and allies experimenting blockchain tech to dethrone USD


FDD: U.S. State Adversaries seeking Blockchain Sanctions Resistance (Illustration by Daniel Ackerman, picture from Foundation for Defense of Democracies)

“China, Iran, Venezuela are developing crypto in effort to dethrone US”, reported by Yahoo Finance on July 11, quoting a report published by the Foundation for Defense of Democracies (FDD).

Cryptocurrency is a medium of exchange in digital form, and more importantly, it operates outside the conventional central and commercial banking systems which are now both under the heavy influence of the United States.

Yahoo Finance further explains: “… Blockchain technology may be the innovation that enables U.S. adversaries for the first time to operate entire economies outside the U.S.-led financial system,” the organization wrote. ‘These governments, therefore, are prioritizing blockchain technology as a key component of their efforts to counter U.S. financial power …

“… Technology has created a potential pathway to alternative financial value transfer systems outside of U.S. control. The target timeline may be two to three decades, but these actors are developing the building blocks now,’ the FDD said in its report …

“… They envision a world in which cryptocurrency technology helps them eclipse U.S. financial power, much the way that the dollar once eclipsed the British pound,” the organization added …”

Under the report’s Overview of Findings, FDD says

“… China is less threatened by U.S. sanctions than other adversaries (Russia, Iran and Venezuela), but displacing U.S. influence in the global financial system is a national priority. China’s central bank is devoting significant resources and expertise to blockchain research and digital currency development. China’s engagement in blockchain payment systems may be the biggest variable in sanctions resistance efforts. China’s buy-in, if it involved moving its trade onto a blockchain platform outside the conventional system, would be a game-changer.”

In other words, alongside the increasing share of Renminbi (RMB, or Chinese Yuan (CNY) ) in the international currency exchange market (in Jan 2019, 2.15% of global payments was in RMB, the highest since 2016, according to SWIFT), a sizable amount of trades could be transacted via crypto currencies outside the SWIFT system, and more importantly, crypto currencies may become eligible monetary reserves in the future.

China’s role in such a development will be decisive.

The opinions expressed are those of the author, and not necessarily those of China Daily Mail.

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About keith K C Hui

Keith K C Hui is a Chinese University of Hong Kong graduate major in Government and Public Administration and the author of "Helmsman Ruler: China's Pragmatic Version of Plato's Ideal Political Succession System In The Republic" (2013).

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