US intelligence services see Chinese digital currency as a threat
The USA sees a Chinese digital currency as a threat to national security.
US intelligence services are warning US regulators against the introduction of a Chinese Central Bank digital currency (CBDC).
As the Washington Examiner reported on Wednesday, John Ratcliffe, Director of the National Intelligence Institute (DNI), sent a letter to this effect to Jay Clayton, head of the US Securities and Exchange Commission (SEC), last month.
In the report, Ratcliffe suggests that intelligence staff could brief Clayton on the threats to national security posed by China’s leadership in crypto-mining Bitcoin Method and its progress in developing its own digital currency. In this context, Ratcliffe may also call on Clayton to ensure that US companies remain competitive in these areas.
We has reported extensively on the race to introduce a CBDC, with China clearly leading the way among the world’s strongest economies
Since the Bretton Woods Agreement in 1944, the US has enjoyed a privileged status as the issuer of the world’s reserve currency. Today, almost all global trade is still conducted in US dollars, which gives the American currency tremendous power. However, in countries like Russia and China, it is losing more and more of its appeal because the US has imposed extensive sanctions on both countries.
The special status of the US dollar gives the US central bank additional flexibility in its monetary policy or „printing money“, because high global demand makes hyperinflation of the US currency almost impossible. Moreover, the US dollar is an important instrument for enforcing political sanctions.
A digital yuan, i.e. a Chinese central bank digital currency, could endanger the supremacy of the US dollar in international trade. This could also have considerable implications for US national security. A major criticism of the Chinese project, however, is that the national digital currency would be under the supervision of China’s Communist Party. While this could reduce demand, Ratcliffe is concerned that it could give China even more access to information.