China has finally made a move. The plan to introduce eRMB (e-renminbi) was cooked-up many years ago. It was a race against USD as a safe heaven currency. Now, China has a weapon against USD in international trade. The move to start using DCEP (Digital Currency Electronic Payment) caught media attention as early as 2014. China will start introducing digital yuan soon. Read here.
While the US, and other central banks around the world, were physically busy cleaning up their currencies due to COVID-19 pandemic, the digital currency now became an attractive solution. The US has also started looking into digital currency, but who win the race will have the first mover advantage. As of now, China has the lead.
China has indeed planned everything well, starting from the day it liberalised its economy, to the insistence and persistence of getting RMB into IMF currency basket, to OBOR's initiative and the 60 countries trade-connection along the way, to Huawei and its 5G technology (the latest Huawei smartphone did not sell well because it has no Google search platform), and now the checkmate move of introducing sovereign digital currency as trial runs in four big cities. These four cities, strategically, are areas near the host cities for 2022 Winter Olympics in China. You can guess what kind of currency the Olympian visitors will have to use upon entering China.
China claims that the digital currency will render monetary policy and inflation ineffective. This move, if plausible, bodes well for Islamic finance. Now, Islamic finance will have a supporting platform where interest rates and inflation, two most important indicators in capital market, are blunt instruments. Tawaruq as a product financing instrument should really analyse the situation. Take advantage of the non-interest blue ocean, Brothers and Sisters. Learn from the Best (so far) yet our keep our Faith and Identity deep-rooted.
Pic. Chinalisation Circle
Pic. OBOR Map
Pic. 5G World
Pic. China will start trial on eRMB soon in selected cities
Pic. Personal Collection. Design for AID Conference Project
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