China’s Central Bank Digital Currency (CBDC) expansion significantly impacts global trade dynamics, placing Australia in a challenging position between Beijing and Washington.
Marina Yue Zhang from the University of Technology Sydney suggests that the U.S. digital dollar ban could significantly disrupt global finance as it lags in the digital currency race.
In her article,
“The New Cold War Race for Digital Currencies Could Redefine Global Power,”
Zhang emphasizes that political debates in the U.S. are preventing progress, with some lawmakers opposing a digital dollar due to privacy concerns. Meanwhile, Europe and the U.K. attempt to balance fostering innovation and implementing regulation.
Australia has not yet developed concrete plans for a Central Bank Digital Currency (CBDC) due to its economy’s reliance on exports, especially to China. Concerns arise that if China promotes CBDC-based trade settlements, Australian exporters may feel pressured to adopt China’s financial systems, which could threaten Australia’s economic sovereignty.
The increasing shift away from the U.S. dollar, noted since 2022, has led countries to explore multi-CBDC platforms to reduce dependence on Western financial systems. Nations like Russia and Iran use CBDC networks to bypass traditional systems, especially after being excluded from SWIFT. While Western governments are wary of potential overreach, Australia must advance in digital finance without encountering international power struggles.
Adding to the complexity, A report released on February 11 by OMFIF and Giesecke+Devrient reveals that nearly 31% of central banks have postponed their plans for central bank digital currencies (CBDCs) due to regulatory uncertainties and changing economic priorities. Although some central banks are still advancing their adoption efforts, the report indicates that the main setbacks are driven by governance concerns and the need to address urgent economic challenges. Additionally, it highlights that political will, technical readiness, and policy stance are crucial factors influencing legislative progress and timelines.
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