Senior Japanese Banking officials are voicing concerns regarding China’s progress in the development of its central bank digital currency (CBDC), Chinese digital yuan.
CBDC race heating up
China is taking a first-mover advantage in developing a CBDC ahead of several other central banks globally that are seeking to create their virtual currencies. The race for CBDCs has been spurred by a surge in demand for electronic payment methods as well as growing competition from privately issued digital currencies. However, Japan’s International Affairs vice-finance minister Kenji Okamura is concerned about China’s moves, which will make it gain control over CBDC standards.
Kenji said that Beijing is moving at a relatively fast rate, which means they aim at taking first-mover advantage. Speaking during the Official Monetary and Financial institutions Forum seminar, Kenji said that this is something the world should be concerned about. Kenji said that the first-mover advantage is laying the scheme design standards and a tech platform that will facilitate the mainstream adoption of the digital currency.
China wants to take the first movers advantage
A CBDC that will have wide adoption internationally for payments and trade is likely to erode the dollar’s status as the de facto global trade currency. According to analysts, this will undermine the US’s influence. The People’s Bank of China is one of the most advanced central banks working on a digital version of its currency. Already China’s state-owned commercial banks have started internal piloting of a digital currency wallet.
According to commentary from PBOC, the country needs to be the first to issue a digital currency as it moves to take the yuan international and minimize dependence on the global dollar payment system. In the commentary, authors indicated that issuance and control of a CBDC could be a new competition battlefield between sovereign nations.
Sweden and the Bahamas are some of the other countries already piloting their CBDCs. Although there is a race in the CBDC launch, Japan doesn’t plan to launch its CBDC soon.