Governments always want more power and control. This shouldn’t be a surprise to anyone. They also; along with the bankers want more control of the nations and citizens money. As of 2020 China has been experimenting with a Digital Yuan. As of now, American companies in China are accepting it. Including Starbucks and McDonalds.
There is no time frame for official launch. But my assumption is it will be mandatory within the next couple years.
This is a digital currency it’s not a crypto. It is centralized and monitored. There is no blockchain involved.
China is already pretty much cashless. Theres an APP called WeChat that everyone in China uses. (And just got banned in America) By everyone, I mean everyone. It is accepted everywhere in the country. Large stores, small mom and pop shops, taxis, everywhere. The app is used for banking, social media, health checks, renting bikes in the city, news, just everything is in this one app. China is already used to not using cash, so an all digital currency will be extremely easy to implement.
The main reasons I believe countries want to go digital are first and foremost which they’ll never admit to is power and control
The’ll be able to turn you off like twitter. This is an extreme example but it would be easy for an account to be turned off or seized.
All transactions will be traced and can be taxed, including drugs, prostitution, etc. If you buy gold they’ll know. It would be impossible to lie on your taxes. It will also be impossible to counterfeit the currency as well. I think I only saw a fake bill in America once, but in China its a little more common. It happened to me a couple times when I lived there.
China will also be able to exit the SWIFT system. They wont have to use SWIFT codes to send money globally. This will give them the advantage and option to not have to bother with an innificcifent US and Euro based payment order system, and will be able to send their currency instantly across the globe.
If this digital currency works out, other countries will start to digitalize their currency too. There is already talk of the digital dollar. What governments/central banks will eventually do is take interest rates negative. You won’t be able to pull your cash out and hide it because of the negative rate. This will force you to spend or invest your money.
It could be accepted world wide. You will be able to spend your Yuan in Chinatown Chicago if there is a platform in place there. They want to take over the Dollar as the global currency. China will require all shops to accept it. This is the advantage China has. If they say something must be, then it is. So instantly it will be used by 1.5 Billion citizens. Do you think Pakistan would want to use it? Or other Asian nations. They could also say we don’t accept Dollars or Euros any more and you must use this digital app. They already limit the amount of cash an individual citizen can take out of the country to 50K a year, USD. They could also issue instant loans to its citizens, as peer 2 peer loans are illegal.
For China its not so much Bitcoin competition. Chinese can now buy Bitcoin. Once the digital currency gets accepted and China is in the right position , they can then say: Now we only buy oil in Digital Yuan. Russian and Iran could sell oil to them in Yuan. That will really hurt the US as a reserve currency. Oil is currently priced in Dollars.
Remember Saddam tried to do this with the Euro, Gaddafi tried to make a gold backed African currency, and you saw what happened to them. I don’t think that an actual physical war will happen with China. But sanctions and divestment could. America doesn’t have to use the currency excuse either. They can just say that China isn’t giving Muslims civil rights, or the Taiwan, Hong Kong issue, as an excuse for sanctions.
I’m giving some extreme examples but why wouldn’t governments do this. They will gain more power this way. Not only over the citizens but mainly trade as well. This isn’t anything to fear, because there is nothing we can do. So don’t panic and worry about change the only thing you can do is be prepared and aware.
Buy cash flowing assets which will rise or hedge inflation.
As of now, keep a cash reserve to get you through the down times
Buy the over all US stock market. When inflation rises so does the stock market. Not a lot of people know this. But when inflation rises so do many asset classes.
**Buy cash flowing realestate in desirable neighborhoods. This has been mentioned many times on this blog. Cash flow and appreciation where people want to live.
Keep 1% of your net worth in gold
Once there is more global demand and trade with the digital Yuan. China will no longer peg their currency to the dollar. They will allow it to freely float and to be determined by market demand.