To Compete With China, Does the US Need a Digital Dollar?

July 8, 2021 Updated: July 8, 2021

Commentary

As the U.S. dollar continues to lose its purchasing power, there are legitimate fears that its days as the global reserve currency are coming to an end. Although it is still very much the international currency of choice, the dollar, like all currencies, must move with the times.

You see, the future of money is very much digital. While the Biden administration is busy debating the merits of a digital dollar, China is busy unleashing its digital yuan.

According to Ray Dalio, one of the world’s most successful hedge fund managers, the digital yuan will pose a threat to the dollar–unless the dollar moves with the times. Brian Armstrong, the CEO of Coinbase, one of the biggest cryptocurrency exchange platforms in the world, echoes Dalio’s sentiments. Both men are highly knowledgeable experts; when they speak, we should listen. More importantly, the Biden administration should listen.

A digital yuan is good for China, but it’s not good for the broader world. Make no mistake about it, China’s vision is very much global in nature. Whoever controls the money, to paraphrase Mayer Amschel Rothschild, controls the people. China knows this better than most. With a digital yuan, the Chinese Communist Party (CCP) will have the power to influence the lives of billions of people, both domestically and abroad.

Trials of the digital yuan started earlier this year. By February of next year, when the country hosts the Beijing Winter Olympics, the digital currency will be tested with international visitors and athletes. Shortly after this testing period, one assumes, an international assault mission will be launched.

Epoch Times Photo
A customer tries Alipay’s facial recognition payment solution “Smile to Pay” at KFC’s new KPRO restaurant in Hangzhou, Zhejiang Province, China, on Sept. 1, 2017. (Stringer/Reuters)

China’s Plans for Global Domination

The UK-based Centre for Economics and Business Research (CEBR) predicts that China will overtake the United States to become the world’s largest economy by 2028, and the digital yuan will help to expedite the process. This has been the plan for years. In fact, China’s plans for global domination have been in place for decades. Take Africa, for example, now the fastest-growing continent in the world. Through its Belt and Road Initiative, the CCP has invested in 52 of its 54 countries. In February of this year, in an opinion piece for CoinDesk, Michael Kimani explained the many reasons as to why China has become “the leading contender” in the race “to define a digital currency standard for the emerging digital economy.” As Kimani writes, the CCP has “significant influence over Africa’s technology stack,” including mobile handsets and “mobile network layers.” Now, because of “specially designed chips embedded deep within dozens of popular Chinese phone brands that dominate Africa,” the CCP is in a strong position to launch its digital currency across the continent. Interestingly, when one examines the five fastest-growing economies in the world, China has long-term agreements with four of them. These long-term agreements, of course, are inextricably linked with its digital currency.

In a 2018 paper, the digital yuan’s developers claimed that currency would offer “a new way for economic control.” Domestically, the digital yuan will be linked with China’s notorious social credit system, meaning a person with a poor score may very well be denied access to their funds. Abroad, although the CCP won’t be able to employ this exact system, the currency may very well be programmable (i.e., come with an expiry date) and will most definitely be monitored. Paul Jossey of The Enterprise Institute warns of the dangers associated with a Beijing-backed currency. In his opinion, it is “a springboard for nothing less than total financial population control,” which will result in a sort of “digital tyranny.” The CCP, according to Jossey, is attempting to establish a “hegemonic financial system that will surveil everyone.” This new wave of financial authoritarianism should concern readers around the world. What, if anything, can be done to counter the Chinese threat?

As the United States is the only country capable of countering the CCP, a digital dollar is a must.

US dollars
U.S. one hundred dollar notes are seen in this picture illustration taken in Seoul on Feb. 7, 2011. (Lee Jae-won/Reuters)

Last year, Mastercard published a very interesting report. According to the authors, “countries that prioritize digitized payment economies are better placed to mitigate the associated adverse impact of unemployment, financial exclusion, fraud, theft, cost of cash, and corruption.”

Additionally, “each 1% increase in the use of digital payments” produces “an average annual increase of US$104 billion in the consumption of goods and services.” Adopting a digital dollar will help the American economy. More importantly, through the creation of more employment opportunities, a digital dollar can help the American people. To counter China, a stronger America is needed.

The future, whether we like it or not, is very much digital. From self-driving cars to mind-reading technologies, digital passports to programmable money, only a fool would argue otherwise. In this digital revolution, China is leading the way. A world dictated by Chinese leaders will benefit no one but the elites in Beijing. Unless the United States launches a digital dollar in the near future, there is reason to fear that the Fourth Industrial Revolution will have all the hallmarks of a dystopian novel.

John Mac Ghlionn is a researcher and essayist. His work has been published by the likes of the New York Post, Sydney Morning Herald, The American Conservative, National Review, The Public Discourse, and other respectable outlets. He is also a contributor to CoinDesk magazine.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

John Mac Ghlionn
John Mac Ghlionn
John Mac Ghlionn is a researcher and essayist. His work has been published by the likes of the New York Post, Sydney Morning Herald, Newsweek, National Review, The Spectator US, and other respectable outlets. He is also a contributor to The American Conservative.