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China may soon launch virtual currency

China could launch its own digital currency within the next 6 to 12 months, according to fund manager Edith Yeung. This could become a challenge to the US dollar’s global dominance.

The Chinese government has been researching and studying the possibility of launching its own digital currency in recent years and has identified entities for a potential roll-out, said Yeung.

China recently threw its weight behind blockchain — the technology that underpins cryptocurrencies such as Bitcoin. State media reported that President Xi Jinping said China should look to take a lead in the technology.

Also at the East Tech West conference on Tuesday, Wendy Liu, head of China strategy for UBS told CNBC there was greater willingness in China than elsewhere to back blockchain and 5G technologies. That’s because they are key to facilitate and manage commerce in the world’s most populous country, she said.

“Due to its own needs, (China) is going to push in that direction and you see this willingness to back these technologies more so than anywhere else,” said Liu.

While the US dollar remains the “prime” global currency, Yeung said the wider use of the Chinese yuan could “challenge the US”: “I think the Chinese government is being really smart about driving the adoption of RMB,” Yeung said, referring to the renminbi, another name for the Chinese yuan. “Can you imagine, especially for the One Belt One Road initiative, they (start) to lend to all in virtual RMB? Many of these countries will want to work with China to start adopting virtual RMB.”

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