New details have recently emerged about the highly anticipated launch of China’s new digital currency.
According to an article posted by the Guardian (28th April 2020) they state, ‘China starts major trial of state-run digital currency’.
https://www.theguardian.com/world/2020/apr/28/china-starts-major-trial-of-state-run-digital-currency
There has been a lot speculation and debate from the cryptocurrency and precious metals community over the past few years, about governments around the world working on some kind of new digital currency. China has almost always been mentioned as one of the first countries who would start to introduce their own digital currency. It seems this long debate now has some evidence of trials happening in 2020.
The Guardian article then goes on to say, ‘It has reportedly begun trials in several cities, including Shenzhen, Suzhou, Chengdu, as well as a new area south of Beijing, Xiong’an, and areas that will host some of the events for the 2022 Beijing Winter Olympics, according to domestic media.’
Some reports have claimed that the trial will consist of subsidising some travel for public servants as well as wages. However, the main focus will be on food and retail.
Although not officially confirmed, screen shot pictures have been emerging online since April 2020 of this new digital currency. It seems to work in a similar way to other popular payment apps or digital wallets, such as CashApp or PayPal.
If these claims are true, then it seems that China is using the impact of Corona Virus as a perfect platform to propel society into a fully digital /cashless economy.
It has been reported, although the People’s Bank of China will issue the new currency, it would be distributed by existing banks to their customers.
It is reported that the new digital currency will be pegged to the national currency the Yuan. However, many in the precious metals community have been debating that the digital currency will in fact, be part-backed by gold because of the sheer amount of gold that has been purchased and accumulated by China over the recent years. This will then give society in general confidence in the new digital currency, as it will be backed by a tangible asset and would not be able to be ‘digitally-printed’ like current fiat currency’s.
In an interview with Max Keiser, host of the Keiser Report on Kitco News, he goes on to explain how according to his ‘sources’, China may have up to 20K tons of gold. He explains that this ‘two-pronged attack’, of releasing the fact that China will be introducing a digital currency and then spring onto the world that they have all this gold to back it up. (See YouTube link: https://www.youtube.com/watch?v=DgOthBngUq0).
Although this is highly speculative, and sources are extremely vague, it does highlight the almost frantic online debate about this subject.
The highly respected author Jim Rickards who has written books such as ‘The New Case for Gold’ has suggested countries like China maybe building towards a gold backed digital currency as a stronger competitor to the U.S. dollar. He also speculates that China may not yet have enough gold holdings to fully implement the gold backed digital currency.
Whether you believe the gold backed digital currency is coming or not it seems there is a lot of action going on around the world to weaken the U.S. dollar.
A weaker dollar is good news for gold.
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