Digital Currency: Where China is Way Ahead of US in Innovation
The CEO of Circle, a global crypto financial services company, has highlighted China’s path to issuing its digital currency as “an example of where China is way ahead (of the US) in terms of technical innovation, in terms of real innovation in payment systems and the way the future of the economy is going to work, I think China is way ahead.”
Jeremy Allaire, in his interview on Global Coin Research podcast, notes that a digital currency version of RMB that could be run on the internet will create an opportunity for China and Chinese companies to interact with counterparties all around the world directly and bypass the Western banking system. By building more direct settlement paths, more forms of economic and trade arrangements and others could be run over digital infrastructure between China and the rest of the world.
“When I look at it, I see a country that is looking at the next 10, 20, 30 years, the role that China can play in that and building an infrastructure to support that. So, I think it’s very bold, I think it’s really critical. I think it would probably have a great deal of success. I think it’s noteworthy that there’s not a single person in the United States government or the Federal Reserve working on anything remotely close to it.” Allaire said.
About 40% of Circle’s operation is focused in North America while 30% to 35% in Asia with an office in Hong Kong and the remainder in Europe. The company which recently expanded into Bermuda, runs Poloniex exchange, created the USDC stablecoin issued together with Coinbase (already tokenized over US$1 billion within a year) and this year started to run an online fundraising platform.
Allaire maintains that developer activities around Bitcoin, as the main cryptocurrency, have been encouraging than years ago. Coupled with the present “really complex global macro environment where there’re some unprecedented things happening: the emergence of more and more negative yields, rising nationalism, rising trade conflicts, the global macro risk that poses, and obviously the very specific markets that have varying levels of volatile distressed fiat currencies,” he says interests in assets like Bitcoin will continue in line with the long-term view of more people wanting to have some of their wealth in a digital asset like that.
He adds that China’s push for a digital currency aligns with one of Circle’s founding beliefs that the major global trade currency would become digital currency at some point.
“Our view has always been that the role of the RMB was going to grow in the world. I think of the broader concept of the internationalization beyond the Belt and Road Initiative, the desire to really expand China’s roles as a trade counterparty in more and more regions for consumers and more and more markets and businesses and more markets to have more direct forms of immigration and trade with China. Those are all a major force in history that’s happening. Digital currency is such a natural path for that to grow.”
He adds that a digital currency will give China a better monitoring policy supervision and transmission more than cash and thinks every central bank will eventually see and follow in the steps.