Use of digital Yuan in Winter Olympics worries Republicans

Key Takeaways

• US Republican senators worried about use of digital Yuan by American athletes at the 2022 Beijing Winter Olympics.
• Chinese digital Yuan becomes headache for US Authorities
• China hits back, dismissing worries by US Senators, calling them ignorant.

YEREVAN (CoinChapter.com) — Three Republican Senators have appealed to the U.S. Olympic Committee to forbid American athletes from using China’s digital yuan at the 2022 Beijing Winter Olympics while worrying about data security and sensing the threat of possible espionage.

In a strong written appeal to Susanne Lyons, board chair of the U.S. Olympic Committee, Marsha Blackburn, Roger Wicker, and Cynthia Lummi argued:

“Olympic athletes should be aware that the digital yuan may be used to surveil Chinese citizens and those visiting China on an unprecedented scale, with the hopes that they will maintain digital yuan wallets on their smartphones and continue to use it upon return.”

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What is the digital yuan?

In an attempt to replace some of the cash in circulation, China’s apex bank, the People’s Bank of China (PBOC), has come up with the digital yuan, or as they call it, the central bank digital currency (CBDC).

The Chinese Government has worked on the project since 2014, arguably the longest by any Government so far. The authorities plan to make the digital yuan a legal tender in the country. Additionally, users will not pay any interest on the digital yuan.

Earlier this year, China started testing its digital currency in several cities, including Shenzhen, Chengdu, and Suzhou.

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Why go digital?

To quote Fan Yifei, the Deputy Governor of the People’s Bank of China, there is a “pressing need to digitalize cash and coins”.

Various factors played a role in the shift to digital currency.

To begin with, digital currency is more economical and cost-effective as it does not require printing or minting money or storing it in any physical form. In addition, digital coins are more convenient to use and transact. Besides, digital currency is safer and harder to counterfeit. It is also harder for anyone to use digital currency anonymously as all transactions are traceable.

China’s digital currency will compete with the country’s top wallets like Alipay and WeChat Pay but will not fully replace them.

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A headache for the USA

The news of China’s digital currency plans sent shudders down the spines of America’s top political brass. The Biden Administration was quick to act. They feared that China was eying to lead the digital currency industry.

The U.S Treasury, the State Department, the Pentagon, and the National Security Council were worried about the potential implications of China’s move.

One of the major concerns was that countries and institutions could use China’s digital Yuan to work around U.S. sanctions. In effect, it could also replace the US Dollar as the number one global currency. Governments and businesses use the US Dollar in cross-border transactions. That gives the United States the power to exercise control on the worldwide market.

More than 20.8 million people have opened a virtual wallet, according to the report by the People’s Bank of China.

China hits back

The Chinese authorities have so far downplayed US Government’s fears. They have declared that they plan to use the digital Yuan only in internal transactions.

Hitting back at the Senators, Chinese Foreign Ministry Spokesman Zhao Lijian did not mince his words. Instead, the minister went as far as calling them ignorant.

“The U.S. politicians should abide by the spirit stipulated in the Olympic Charter, stop making sports a political matter and stop making troubles out of the digital currency in China.”

According to Zhao Lijian, the U.S political need to “figure out what a digital currency is.”

So far, the dragon has managed to keep the US authorities scared to their pants.