Many nations—especially those with testy relations with the U.S., like Russia and China—would also prefer to settle accounts directly via digital currencies. This is not least because the U.S. has increasingly weaponized the dollar for geopolitical gains; it has twice put pressure on the SWIFT banking network to block all transactions with Iran, for example. It is a key reason Beijing has been working hard to establish common global rules for digital currencies. China was the first to contribute digital-currency content to ISO 20022 protocols—a new global standard to cover data transferred between financial institutions, such as payment transactions, credit and debit-card information, and securities trading and settlement information.
Reducing reliance on the U.S. dollar is an explicit goal of many nations developing digital currencies. In a 2019 speech, Mark Carney, governor of the Bank of England, argued that technology could solve the problems of dollar hegemony by allowing the rest of the world, especially developing countries, to win back control over monetary policy. “Any unipolar system is unsuited to a multi-polar world,” he said. “We would do well to think through every opportunity, including those presented by new technologies, to create a more balanced and effective system.”
Fairness also applies to investments. One of the potentials of digital currencies is the acceleration of “tokenization,” or the packaging of value into a form that is instantaneously exchangeable. Global real estate, for example, is worth an estimated $280 trillion. But trading it is extremely difficult, requiring hefty fees, negotiations and red tape.
But what if you could express its value in a token that could just as easily represent a fractional share of a beach house in Thailand, a sapphire in Mumbai or a wine collection in Normandy? Fine art, for example, typically appreciates far more quickly than the stock market. But today it is an investment accessible only to those with a Sotheby’s account and seven figures in the bank. Technology would make it possible to create a digital token that represents a van Gogh or a Picasso, and to sell slivers of art to, say, excited young investors from Manila to Minneapolis.
Cryptocurrencies are already awakening some people to such possibilities, but the universal adoption of digital currencies promises the friction-free exchange of value between investors and consumers of all classes. That, says Sung, “is really the promise of these new technologies in the world of digital finance.” And China, naturally, is proud to be in the vanguard.
“Although the digital RMB is not very popular at the moment, I believe it will be the mainstream payment method in the future,” says coffee merchant Duan Chu, 32, as she enjoys a burrito paid for with the digital currency in downtown Shanghai. “I want to support it as much as I can.”
—With reporting by Leslie Dickstein and Alejandro de la Garza
