China’s digital currency is about to disrupt money

A lengthy article in The Wall Street Journal, China creates its own digital currency, a first for major economy, outlines the likely impact of Beijing’s initiative and the strategic possibilities it offers in terms of avoiding US blockades of its companies, how this will boost its role in international transactions, while allowing it to monitor its economy in real time.

Stablecoins, or digital currencies linked to a specific asset or basket of assets, are seen by many as the step prior to introducing cryptocurrencies: centralized and controlled by a regulator, whether a central bank or some other type of official entity, they offer a greater understanding of the evolution of users, who continue to see behind them the same type of backing that paper currencies had. However, that backing, in reality, is more fragile and arbitrary, especially in post-pandemic times, than that of a cryptocurrency that only issues a fixed amount of units based on its regulatory algorithm. This requires a leap of faith that many find difficult to consider: to go from relying on mathematics to relying on a centralized authority with the ability to manipulate the value of a currency is, as such, a value proposition that many people still do not accept.

What is the significance of China being the world’s first major economy to launch a digital currency…