David Roche, president and global strategist at The Independent Strategy, believes China’s digital yuan still has a long way to go before it can challenge the US dollar as a reserve currency, CNDC reported on Nov. 2.

According to Roche, China’s central bank digital currency, or CBDC, could hypothetically receive the US dollar as a reserve currency, but it would take “a very, very long time.” The strategist allegedly claimed that the euro accounts for a “paltry” 18-20% of total world trade, while the Chinese yuan accounts for 2% of international trade. He said:

“Getting rid of the dollar – what the euro is trying to do and stabilize at a measly 18-20% of all international events – is very difficult. […] There is a certain illusion about the moment when the yuan – which makes up 2% of international trade settlements and even less if they reach financial investment flows – can take over. ”
Roche also stressed that the US economy has contracted over the past 20 years. However, as the strategist noted, the dollar accounts for “an increasing share of international trade settlements and a larger share of financial reserves.”

Roche’s comments came shortly after Federal Reserve Chairman Jerome Powell announced that the US government is not concerned that China will gain an advantage for the first time when it comes to converting digital currencies to digital. The United States will focus on “getting it right” rather than trying to be the first to implement CBDC, the official said.

At the same time, a number of industry experts have expressed fears that the US dollar could lose its status if the digital version is not launched soon. In October 2019, former CFTC head Christopher Giancarlo said that the dollar could lose ground in the future as other countries are actively testing central bank digital currencies.

On October 20, Anthony Pompigliano, co-founder of major cryptocurrency firm Morgan Creek Digital, said the United States would return “a lot from China” if the country continues to delay the digital dollar initiative.

Source: CoinTelegraph