Chinese state researchers put forward the idea of creating a “pan-Asian digital currency” to enhance regional monetary cooperation and loosen reliance on the U.S. dollar.
Researchers Song Shuang, Liu Dongmin, and Zhou Xuezhi from the Institute of World Economics and Politics under the Chinese Academy of Social Sciences proposed creating an “Asian yuan.” China Macro Economy reports it.
The researchers believe that the main objective of the new digital currency is to reduce the reliance on the U.S. dollar in the Association of Southeast Asian Nations (ASEAN) and increase financial stability in the region. The experts plan to peg the digital token to a basket of 13 currencies from ASEAN member countries.
An article proposing the “pan-Asian digital currency” was originally published in the economic journal World Affairs by the Chinese Ministry of Foreign Affairs in August this year. It only became freely available at the end of last month.
According to the published article, the “Asian yuan” will be based on distributed ledger technology (DLT), which will prevent the dominance of any single country and remove obstacles to regional monetary cooperation.
China will lead the creation of the pan-Asian digital token. Such a decision relies on the PRC government’s success in testing the Chinese central bank digital currency (e-CNY), as well as the fact that the country has the world’s second-largest economy.
The article also proposes creating a special department to coordinate the deployment of the “Asian yuan” under the Asean+3 Macroeconomic Research Office (AMRO), which would later be upgraded to the Asian Monetary Fund. The researchers propose to start testing the new digital currency with cross-border payments between central banks, state-owned enterprises, and large commercial banks in partner countries. The pilot project will enable payments in areas such as commodity trade, outbound investment, government aid, or bond issuance.
While China is trying to lessen the impact of the U.S. dollar on Asian economies, lawmakers in other countries are trying to prevent the widespread use of the digital yuan in their regions.
