III. Digital renminbi – Taking the US–China geopolitical rivalry to a new level? Eszter Boros – Marcell Horváth The world has been interested in the potential of central bank digital currencies for years, and in 2020, China came closest to implementing the concept. Since tests of the digital renminbi (RMB) began, more and more details have become known about the functioning of this new form of money, which provides an opportunity for re-thinking the future of the world currency. A centralised e‑RMB suitable for direct payments is the most serious challenge to the USD and the United States’ power in recent decades. The threat could primarily materialise through the circumventing of the US financial system, which would considerably reduce American geopolitical influence. The rise of the e‑RMB may be promoted by its ease of use as well as partnerships along the ‘New Silk Road’, with China at its centre. However, if the East Asian country wishes to provide a genuine alternative to the USD, a new economic model and financial market liberalisation seem to be crucial.
1. Introduction In the spring of 2020, during the hard times of the coronavirus pandemic, the announcement by the Chinese central bank (People’s Bank of China, PBoC) caught the whole world’s attention: the East Asian country started testing a central bank digital currency (CBDC) in real payments. The pilot project that was expanded to several provinces in the summer shows remarkable progress, therefore the digital renminbi (e‑RMB) is set to be the first officially introduced (fully-fledged) CBDC. The concept of central bank digital currencies has come into focus in economic policy — 68 —
