The People’s Bank of China (PBOC) has suggested that its plans to launch its own digital currency are primarily motivated by a desire to protect its foreign exchange sovereignty. However, Circle CEO Jeremy Allaire believes that the move could also help promote broader use of China’s currency around the world.
During an appearance on CNBC’s Squawk Box Wednesday, Allaire said that he believes the Chinese move to issue a central bank digital currency could achieve several goals, but that one potential benefit stood out from the rest:
“I think the bigger opportunity here is this is a way for the Chinese yuan to be distributed globally.”
According to Allaire, the digital yuan could provide a new way for people around the world to use the yuan in “everyday transactions” – in much the same way that many people are able to use U.S. dollars. He suggested that the new digital currency could be a mechanism for internationalizing the Chinese yuan.
If that happens, the digital yuan could potentially help China in its bid to challenge the U.S. dollar’s status as the world’s main reserve currency. As Allaire noted, it could also help China “bypass the Western banking system.”