‘The world will be completely different after COVID-19.’ What is the main point of the ‘after COVID-19’? It is digital transformation. COVID-19 brought this process, which was already in progress, dramatically into our daily life in a month. Online shopping, online classes, online business, telecommuting, and telemedicine are examples. The basis of digital transformation is the digital payment system, and its core is digital currency. CBDC (Central Bank Digital Currency) based on blockchain technology issued by the central bank is expected to be the ultimate winner. This is because there are no institutions with the same credit and system as the central banks.
The leading country is China. People’s Bank of China is committed to issuing CBDC for the first time in the world. If this becomes a reality, digital yuan will be supplied abroad in large quantities for foreign aid, external investment, and foreign trade. Therefore, it is expected to gradually erode the economies of developing countries with high economic dependence on China. In particular, Korea, the only non-key currency country among the five largest trading partners of China, is likely to be targeted as a digital yuan distribution hub. According to the financial industry on 29th, the PBoC is preparing to issue CBDC this year despite COVID-19. The digital currency research institute under the PBoC has completed the technical development for implementation of the basic features of CBDC recently through about six years of research. The PBoC is currently drafting applicable law for issuance and distribution of CBDC. Former chairman of the Financial Services Commission and chairman of Institute for Global Economics, Jeon Gwang-woo explained that CBDC issuance of China is a “challenge to present the yuan as an alternative in the US dollar-based key currency system.” There are many negative opinions about introduction of cryptocurrency in China, but the interest in non face-to-face economic activity is increasing due to COVID-19, so the digital currency economy is likely to develop,” he added.
Especially, Korea is the largest trading partner of China and has been aiming for a yuan hub, so it can be a testing ground for the internationalization of digital yuan. Economic bloc of Chinese overseas, such as Hong Kong and Southeast Asia, where Alibaba, WeChat Pay, BIDU, and Huawei occupied the economic network, and developing countries in South America and Africa, where loans and financial support of the Belt and Road Initiative were largely provided, are targeted by the digital yuan.
Competition for issuance of CBDC between countries is becoming like World War. Central banks in 22 major developed and emerging countries including Europe, Singapore, and Canada, are also considering or preparing to digitalize their currencies. The Federal Reserve still has a negative stance on issuing CBDC-based digital dollars, but digital currency issued by US companies may actually serve as a digital dollar. Facebook plans to issue ‘Libra’, a digital currency that can be used internationally, through its subsidiary ‘Calibra’ this year.
Min Byung-kwon(2020.03.29) 韓, 中 ‘디지털위안화’ 실험장 될 수 있다
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