Chinese government researchers are toying with the idea of rolling out a digital currency across Asia. The value of this digital currency is derived from a basket of currencies of 13 Asian countries.
East Asian Coins
The digital token will be pegged to 13 currencies, including the yuan, Japanese yen, South Korean won and currencies of 10 ASEAN countries. ASEAN A trade group of sorts that includes countries in Southeast Asia: Brunei, Cambodia, the Philippines, Indonesia, Laos, Malaysia, Myanmar (Brunei), Singapore, Thailand, and Vietnam.
researchers say A common Asian digital currency would reduce dependence on the US dollar and help preserve financial stability. Its provisional name is the Asian Yuan.
A quick look at the map of Asia shows that India, Saudi Arabia, Israel, Iraq/Iran and many other important countries are missing. It seems that this Asian cryptocurrency is mainly for East Asia.
“More than 20 years of deep economic integration in East Asia has laid a good foundation for regional cooperation on a single currency. The conditions for the establishment of an Asian yuan have gradually developed,” said researchers Zhang Shuang, Liu Dongmin and Zhou Suzhi.
China will play an important role
It looks like China will play an important role in steering the research and development of the Asian Yuan in the right direction.
China has experience in creating its own digital currency across national borders. Additionally, it has experience in large Asian projects such as China New Silk Road. It was a trade route connecting East Asia with Europe. The project was initiated by China, but any country bordering the route could benefit.
That seems to be the idea behind the Asian Yuan. Researchers propose using blockchain technology to prevent one country from becoming too dominant and to remove barriers to regional currency cooperation.
The dominant dollar
Researchers cited the dominance of the dollar as the reason for proposing the Asian currency. Since the beginning of the year, the Chinese currency has lost up to 12% and the Japanese currency up to 22% against the US dollar.
An Asian digital currency could lead to greater financial stability, say researchers. They pointed to volatility in financial markets as a result of US aggressive rate hikes, which had a negative impact on Asian countries’ foreign exchange reserves.
“East Asian countries have long settled their trade in the US dollar, which increases currency mismatches and exchange rate risks. This triggered the 1997 Asian financial crisis,” the researchers said.
AMRO and the Asian Monetary Fund
Chinese researchers suggested establishing a department under the ASEAN+3 Macroeconomic Research Bureau (AMRO). It is a Singapore-based macroeconomic watchdog headed by China’s Li Kouqing.
The aim is that the development of the digital currency will be coordinated by AMRO. Ultimately, growth should be transferred to the Asian Monetary Fund.
In August, the Ex China’s Vice Minister of Finance, Zhu Guangyao, is the most formal corporate role for AMRO.
In addition, he proposed The Chiang Mai Initiative is multilateral Regulate, it’s a currency group worth $240 billion. This pot of money is made up of 10 countries namely ASEAN, China, Japan and South Korea. Again, encouraging the use of regional currencies instead of the US dollar.
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