e-RMB: How China Will Relaunch the World Economy with its Digital Currency
China’s digital state currency is set to restart the global economy
“The electronic renminbi (e-RMB) has reportedly been adopted into the monetary systems of several cities.” — Helen Davidson, The Guardian Australia, on April 28th 2020. “A sovereign digital currency provides a functional alternative to the dollar settlement system and blunts the impact of any sanctions or threats of exclusion both at a country and company level,” a China Daily report said in late April, adding that: “It may also facilitate integration into globally traded currency markets with a reduced risk of politically inspired disruption.” The sovereign digital currency, which will be pegged to the national currency, has been under development for some years but in August the bank said it was “almost ready.” However, the following month, the bank’s governor, Yi Gang, said there was no timetable for release.
How the cheap dollar will aid the US and global economies
The main point that comes out of this is one of fear and impending doom. The consensus is that with a president like Donald Trump in power, the US will most probably go to war with China because of the almost certain crash of the US dollar. But, a cheap dollar will ensure that — finally — the production of US-made goods is possible once again. Employment will in turn grow exponentially while the acquisition of products, consumer goods and spending will yet generate more income and profits. Turning the US Economy back on its heels and creating wealth for even the average American and will most definitely overshadow all the expenditures and costs of the pandemic and usher us into a period of financial gains.
US productivity knock-on benefits to the global economy
As the US economy is still the main tractor and benchmark for the world economy, a bustling US economy means other European and Asian economies will greatly benefit and climb back from the abyss where we are more or less because of actual events of COVID-19. As most consumer goods are manufactured in China, massive expenditures acquiring said consumer goods will dope the Chinese economy. The real winner is again China but, for once, the world will also benefit.
e-RMB and international markets
A weak dollar is not necessarily something to fear. On the contrary, it is indeed possible to embrace it and make the most out of it. The only issue of an entire system based on an electronic RMB is actually the cost of the RMB on the international markets. China must ensure that its citizens do not become obscenely rich with an RMB worth over EUR €50,000 and only usable in China thus threatening to cause a massive internal inflation problem that might spill out and backfire on a global economic scale.