Recently, the attention around central bank digital currencies (CBDCs) has been growing. Whether for economic or sovereignty reasons, the launch of a CBDC seems inevitable for many countries. In the United States, the launch of a digital dollar is under consideration and is likely to happen in the near future. Nevertheless, while waiting for this CBDC, some American senators want to ban the use of the digital yuan, the Chinese CBDC, as of today.
This desire to legislate on the Chinese digital currency is not new. Last March, a bill already aimed to censor the Chinese CBDC because of its ability to circumvent the economic sanctions imposed on China.
Now, three Republican senators – Tom Cotton, Mike Braun and Marco Rubio – have joined forces to propose a bill to ban the use of the digital currency payment system operated by the government of the People’s Republic of China. In practical terms, such a ban would prohibit the use of the Digital Yuan in all app shops available in the United States.
Application shops would be all publicly accessible websites, software applications or other digital services that distribute applications to users on computers, phones or any other general purpose computing device. Thus, the hosts and developers of these applications should no longer support or allow transactions in digital yuan.
This proposal is part of a general American distrust of the Chinese regime. The senators wish to avoid “direct control” and surveillance of users’ financial activity.
US concerned about Chinese interference through use of digital yuan
In the minds of the senators, US sovereignty is threatened by the expansion of the digital yuan. The adverse effects of its adoption by US society could lead to mass spying by the Chinese government. All three senators have spoken out on this issue.
Tom Cotton considers that “The Chinese Communist Party will use its digital currency to control and spy on everyone who uses it. We cannot give China that chance. The US must reject China’s attempt to undermine our economy at its most fundamental level.
Mike Braun added that “the United States cannot allow this authoritarian regime to use its digital currency as a tool to infiltrate our economy and the private information of American citizens.
Finally, Marco Rubio, a candidate in the last presidential election, believes that the digital Yuan represents “a major financial and surveillance risk“.
China, the first major world power to launch its own CBDC
China has been developing a strategy for a few years to make the digital yuan a currency used by its own people, but also by citizens around the world. The first tests of their digital currency were carried out in April 2019.
Since then, tests and use cases have multiplied in the country so as to create an increasingly frequent use by Chinese citizens. Now, China’s objective is to exploit this currency at the international level. To this end, the Chinese authorities are working directly with central banks, notably in Hong Kong and Singapore.
Although these bills are by no means guaranteed to pass the US Senate, it is undeniable that the rapid development of the Chinese CBDC is of concern to the US. However, the most coherent option for the US to truly contain its spread is the rapid deployment of the digital dollar.