Douglas Arner, director at Asian Institute of International Financial Law at the University of Hong Kong, believes that international interoperability will become the cornerstone of the CBDC race.
While speaking at the unitize Blockchain conference on July 14, he argued that interconnections between different global economic systems will become “one of the biggest challenges, and the biggest opportunities” as more countries become involved in CBDC projects across the globe.
According to Arner, China is well ahead in the CBDC race. The Chinese financial system according to him has some predispositions for the cross-border adoption of a digital Yuan project. The Renminbi swap lines that China has established with many countries across the globe, speak to the reach China has established within the past few years. Arner addressed China’s reach by saying;
“If we think of the Chinese [CBDC] proposal at the moment, it is largely limited to operating within the context of the physical and electronic borders. But one can imagine how in the context of those electronic borders, if one integrates the system with, say, the RMB swap lines that are engaged in a range of different countries, that sort of RMB electronic area can be expanded outside.”
Arner went on to outline three financial institutions that have the most leverage in the CBDC race, which according to him are; the people’s bank of china, the European central bank and the Fed Reserve.
“Those are different animals than everything else. What Canada or Sweden or the UK or Singapore, Australia or Saudi Arabia may do is all really interesting and nice, but the rest of the world is not potentially going to be adopting that in the context of large-scale economic or financial transactions.”
He concluded by pointing to a potential geopolitical jostling for position in the CBDC race. He clarified that maybe it won’t be a competition but rather an array of alternatives in the digital currency space.
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