It is not uncommon for cryptocurrencies to have a political angle to them. In many ways, the very genesis of Bitcoin had its root in a political system that favored centralization. However, CBDCs were thought to be the regulated counterpart of crypto that follows all the principles of centralization. CBDCs, or central bank digital currencies, borrow the idea of a digital currency from crypto but gets their store of value from national currencies, like the US dollar or the Chinese Yuan. As could be expected from the ongoing rivalry between the United States and China, the competition between the digital yuan and the digital dollar is rising. Lael Brainard from the Federal Reserve recently urged congress to gear up for a battle against the digital yuan – China’s CBDC project.
In the world of fiat currencies, the United States dollar is often taken as a global benchmark. Other currencies are evaluated against the US dollar, as is the price of many essential items. China, in its attempt to topple the United States to be the next global superpower, wants to expand through its digital yuan. As the country has already banned all cryptocurrencies, it does not face the competition that the digital dollar would face. At the same time, the Chinese regime can make it compulsory for all citizens to adopt the digital yuan. The competition between the two superpowers and their respective currencies seems to be brewing, and we can expect to see its ramifications very soon.