Following last month’s People’s Bank of China (PBOC) announcement that its own digital yuan is soon to be released, CEO of American cryptocurrency financial services firm Circle stated that its launch has the ability to boost the global use of the yuan. The reasoning behind the digital currency is to ‘protect’ the currency’s foreign exchange sovereignty. 

Circle CEO Jeremy Allaire said, ‘I look at this really meeting several goals. But, I think the bigger opportunity here is this is a way for the Chinese yuan to be distributed globally.’ The digital currency will be launched through a 2-tier system, with the PBOC and commercial banks being the legitimate issuers. Allaire explained, ‘This becomes a mechanism by which [the yuan] can be used in everyday transactions all around the world…It’s ultimately a foundation for the internationalization” of the yuan.’

Seeing a more global use of the yuan outside China has been on Beijing’s agenda lately. The IMF reported that the world’s ‘reverse currency’ is the American dollar, with 58% of foreign exchange worldwide reserves being in American dollars. The digital yuan will be very similar to Facebooks’ Libra, according to deputy director of the PBOC’s payments department, Mu Changchun. 

Additionally, the new digital currency ‘bypasses the Western banking system, SWIFT, things like this.’ It is ‘quite strategic’ and will help Beijing reduce money related crimes such as money laundering and corruption.