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China Proposes an 'Asian Yuan' to Reduce Dependency on the US Dollar

The proposed "Asian yuan" token supported by distributed ledger technology would purportedly help Asia to minimize its reliance on the US dollar for international trade.

14-Oct-2022 By: Rohit Tripathi
China Proposes an 'A

Researchers at a Chinese state-run think tank have proposed 

An Asia-wide digital currency in order to minimize the country's dependency on a dollar-based economy.

The views of researchers Liu Dongmin, Song Shuang, and Zhou Xuezhi from the Chinese Academy of Social Sciences (CASS) were published in a late September issue of the "World Affairs journal," which suggested the introduction of an "Asian yuan" token. The token would reduce Asia's dependency on the US dollar.

The researchers stated that, similar to other existing and trialed Central Bank Digital Currencies (CBDCs), distributed ledger technology (DLT) would constitute the backing of the Asian token, which would be tied to a group of 13 currencies.

According to the researchers, the currencies would include those of all ten Association of Southeast Asian Nations (ASEAN) member countries, as well as China's Yuan, Japan's Yen, and South Korea's Won.

East Asia's enhanced economic integration over the last two decades has built a solid platform for regional monetary coordination. The researchers stated in a publication that the circumstances for establishing the Asian yuan had gradually emerged.

The publication is associated with China's Foreign Affairs Department, and the academics are from the "Institute of World Economics and Politics," one of several research departments of CASS, a think tank with varied links to the country's ruling party.

The US dollar, and more lately cryptocurrencies, have become popular ways for people in South East Asia to do business, send remittances, and hedge against currency inflation.

The research came just a few weeks before a significant milestone in China's CBDC trial, when the Bank of China announced on Oct. 10 that its e-CNY had transacted over 100 billion yuan, or over $14 billion in value, with approximately 5.6 million merchant outlets already supporting the digital yuan.

The country's central bank is also involved in Project Inthanon-LionRock, a DLT-backed cross-border payment CBDC experiment comprising the central banks of Thailand, Hong Kong, and the United Arab Emirates.

In September, the trial witnessed a "successful" transaction of over $22 million in value in a month on its "Multiple CBDC Bridge" platform, which is regulated by the Bank for International Settlements (BIS).

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