China’s Belt and Road initiative, the project aimed at improving regional co-operation through better connectivity, is one of the most ambitious infrastructure plans globally. While the initiative is purely physical and involves improving road connectivity, the country’s digital infrastructure plans for cross border trade could change the face of international payments in the commercial space. This is because the initiative connects stakeholders from around 150 countries.
Digital Yuan For China’s Belt And Road Initiative
China’s logistics hubs just began promoting the digital Yuan (e-CNY) for usage in cross border trade, as per a report in the South China Morning Post. This could be huge as the Belt and Road initiative was in 2022 already covering 30% of the country’s import export global trade. Hence, this could be seen as potentially largest digital currency usage project so far globally. Earlier, CoinGape reported that India’s central bank, the Reserve Bank of India (RBI), began implementing the digital rupee pilot for settlement of secondary market transactions.
Xuzhou, a well connected city in China’s Jiangsu, laid out a plan to promote the digital Yuan for trade purpose in 21 countries across Europe and Asia, besides taxes and utility services. The city’s authorities said the larger plan is to support the Belt and Road Initiative with e-CNY. Another city, Changshu, will pay government employees using digital Yuan.
However, this may not help the cause of crypto market as the central bank digital currency (CBDC) projects operate outside the blockchain ecosystem. In fact, the CBDC market could potentially hamper cryptocurrency space both financially as well as in regulatory aspect.
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