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China’s Crypto and ‘Petro-Yuan’ on Horizon as Biggest Countries Seek to Get Way from USD

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  • Yuri Molchan
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    As per analysts, several major countries are looking to avoid using USD in the future and here comes China with its DCEP coin and embracement of blockchain

China’s Crypto and ‘Petro-Yuan’ on Horizon as Biggest Countries Seek to Get Way from USD
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These days, many in the crypto community keep saying that national fiat currencies will eventually be gone, replaced by crypto or at least by centralized stablecoins.

Facebook has attempted to launch Libra but has faced a strong resistance from lawmakers globally and in particular – pressure from the US government.

As per CNBC, many believe that China will take over from the US in the future in terms of the reserve currency, thanks to widely used yuan and so-called ‘petro-yuan’. But they also seem to forget about China testing its yuan-backed DCEP coin (digital cryptocurrency electronic payment).

Countries seek to ditch USD and SWIFT – will they use crypto?

As reported by U.Today recently, China, Russia and India are planning to merge their national payment systems to bypass SWIFT in the near future.

Some members of the crypto community hope that China will bring in a Quantum Financial System and that XRP will be used for providing liquidity.

Anne Korin from Analysis of Global Security told CNBC:

“Major movers” such as China, Russia and the European Union have a strong “motivation to de-dollarize.”

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‘Petro-yuan’ and DCEP

Recently, the Chinese president Xi Jinping stated that his country will use all possible opportunities offered by the blockchain technology. Also, China is planning to launch its own centralized and yuan-backed digital currency titled DCEP.

Some major investors in the west believe that by doing so China hopes to take away the leadership in the digital financial sphere from the US. Meanwhile, America does not seem to be in a rush to launch its own digital dollar.

Among those who fears the US may lose its leadership in this area to China is the angel investor Anthony Pompliano and the founder of Facebook (and Libra) Mark Zuckerberg.

When speaking in front of the US Congress recently, he stated that unless Libra is permitted to launch the global leadership of the US in digital finance is not guaranteed.

As per CNBC, another sign of the possible replacement of USD with yuan in the future is the popularity of the so-called ‘petro-yuan’ - yuan-denominated crude oil futures.

Besides, China insists on paying for the imported crude oil with yuan, rather than USD.

 

What are your thoughts on the possible takeover of USD by yuan (or DCEP) in the future? Feel free to share them in the comment section!

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About the author

Yuri is a journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future. ‘Hodls’ cryptocurrencies. Has written for several crypto media. Currently is a news writer at U.Today.

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Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability

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  • Vladislav Sopov
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    According to its Financial Stability Report of November 2019, the Board of Governors has warned about the dangers of stablecoins.

Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability
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The Board of Governors of the U.S. Federal Reserve System have issued their monthly Financial Stability Report. This special report is dedicated to the profits and risks of "global stablecoins".

Stablecoins: Global System with So Many "Ifs"

First, the Federal Reserve admits to the numerous advantages that stablecoins present as a concept. It has been highlighed that stablecoins are "faster, cheaper, and more inclusive payments could complement existing payment systems". This is in comparison to cases where traditional financial institutions are sophisticated and poorly accessible. Stablecoins can also be managed to eliminate the volatility of cryptocurrencies, which is one of the borders for them to be utilized as the medium for exchange.

Therefore, the "global stablecoin initiatives" like Facebook's Libra can rapidly achieve cross-border adoption. However, the major threat for stablecoins is apparent - the "inability to convert in national currency". The loss of confidence in "pegging" the stablecoin to traditional assets can lead to a run, in which several holders will attempt to liquidate their stablecoins at the same time.

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This dramatic scenario may be caused by "poor design and governance", and can result in severe consequences for international economic activity, asset prices, and financial stability.

Transparency First

The Federal Reserve also outlined in its report that in many cases, stablecoins can be utilized for money laundering, terrorist financing, and other financial crimes. Therefore, the Federal Reserve would require operators of such systems to conduct their Due Diligence, as well as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to avoid any abuse. Moreover, the problems of disclosure policy and protecting investor data should be of paramount importance for stablecoin issuers:

Disclosures should clearly detail consumer and investor rights and protections, including whether the holder of the stablecoin has any rights to the underlying asset. Issuers should be transparent on how the stablecoin is tied to the underlying asset, has been said in the Report.

Last but not least, the report highlighted that the Federal Reserve, together with the Group of Seven, will closely monitor stablecoin developments as well as all the risks associated with it.

Have anyone ever invested in stablecoins? Do you prefer to use it, or to pay extra fees for fiat gateways? Tell us your story on Twitter!

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About the author

 Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockhain. Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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