Why China’s digital yuan is ‘largest menace to the West’ in previous 30 or 40 years, in keeping with Kyle Bass
Kyle Bass, chief investment officer of Hayman Capital Management, says the biggest threat to the West is the advent of the digital yuan, which he has termed a Trojan horse that could undermine developed western countries.
“I think China can enforce its digital currency for trade and investment in China per se unless the US and the West prohibit it or prohibit it in principle,” Bass told CNBC during an interview on Tuesday afternoon.
“And I believe the digital yuan is the greatest threat to the West that we have faced in the last 30 to 40 years, and that’s because China can actually put its claws into everyone in the West and potentially export them digitally Authoritarianism, ”said Bass.
Of course, not everyone agrees with bass.
China has said the digital yuan is not an attempt to displace the US dollar DXY, -0.41% as the world’s reserve currency.
Last month, China’s Central Bank Deputy Governor Li Bo said the country’s CNYUSD, CNHUSD, 0.03 digital yuan is for domestic use.
“For the internationalization of the renminbi, we have often said that it is a natural process and that our aim is not to replace the US dollar or other international currencies,” Li said in a panel at the Boao forum in mid-April.
Li said the digital yuan will be expanded to more Chinese cities after it was introduced as a test in cities like Suzhou, Shenzhen, Chengdu and Xiong’an.
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The case of China undermining the US dollar has taken various forms this year.
PayPal co-founder Peter Thiel said China is using Bitcoin BTCUSD, -0.68%, as a financial weapon to displace the dollar. At the Richard Nixon Foundation seminar in April, Thiel said China prefers two reserve currencies that counteract the dollar.
“From China’s point of view, they don’t like it when the US has this reserve currency because it gives the US a lot of leverage over Iranian oil reserves and the like,” Thiel said.
China’s version of a digital currency is controlled by the central bank that will issue the new electronic money. The digitized currency is expected to provide the Chinese government with new tools to monitor both its economy and its population.
The digital yuan also presumably negates one of Bitcoin’s main selling points: a decentralized platform that is largely anonymous.
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Officials in the US were largely skeptical of Bitcoin and crypto, but Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell said the creation of a digital dollar is currently under consideration.