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G7 Member Issues Warning of Digital Yuan ‘Dangers’

Tim Alper
Last updated: | 1 min read

Japan’s Finance Minister Taro Aso has warned bankers in the country of potential problems caused by China’s forthcoming digital yuan launch – hinting that a Beijing-issued digital fiat could cause a rift between Tokyo and Washington.

Taro Aso. Source: a video screenshot, Youtube, Milken Institute

Per Reuters, Aso told a summit of Japanese bankers that China will likely seek to make international payments in its new digital currency – intimating that Washington would likely to take a dim view of countries choosing to use the digital yuan in place of the dollar in international trade deals.

Aso pointed out that Japan, a member of the Group of Seven (G7), overwhelmingly uses the USD for international trade, and warned that the digital yuan could thus pose a “huge problem” for Japan’s traders and exporters.

Bilateral trade between China and Japan increased by 8.1% in 2018, per Ministry of Commerce statistics released in summer last year.

Aso warned that the United States and China could enter a “new Cold War,” and warned that in the year ahead,

“In the United States, anti-China sentiment will be unilateral in both the House and Senate.”

The remarks were Aso’s first on the digital yuan, although the minister has spoken out on both cryptocurrencies and stablecoins in the past.

Meanwhile, the South China Morning Post reports that the central People’s Bank of China (PBOC) has said it made “smooth progress” on its digital fiat in 2019, but stopped short of announcing when the digital yuan would first see the light of day.

The PBOC instead insisted it would “continue with its research and development” into the digital yuan in the year ahead – despite claims in the Chinese press that the central bank is on the verge of launching two testbeds for the digital yuan in conjunction with state-run telecoms operators and banks.