Eswar Prasad, professor of trade policy at Cornell University and senior fellow at Brookings Institution, believes the digital yuan cannot replace the dollar as a reserve currency.
Eswar Prasad noted that while China’s national cryptocurrency may indeed increase the yuan’s role in international payments, it is unlikely to displace the dollar as the world’s reserve currency.
The professor stressed that the government of the Celestial Empire needs to continue reforming the national financial system and develop international payments in yuan.
Prasad believes that in recent years the yuan has gained notable recognition on the world stage as a means of payment and a reserve currency. True, the high cost of the euro and the pound played a significant role in this.
“Even when the IMF added the yuan to the SDR (Special Drawing Rights) basket with a share of 10.9%, it was not the dollar that pushed back, but the euro, pound and yen,” Prasad said.
Another argument in favor of the fact that the yuan will not become a global reserve currency, the professor called the fact that the Chinese authorities still control the exchange rate of the national currency and are not going to change their policy in the near future.
However, developing countries that have strong trade relations with China can “start settlements directly in local currency.” And when the digital yuan is officially launched, such countries will start using it as well.
In early July, Genesis Block expert Charles Yang expressed the opinion that it would be difficult for the digital yuan to catch up in popularity in the Asian market with the USDT stablecoin.