Former Bank of Japan (BoJ) banking executive Hiromi Yamaoka believes Russia's attack on Ukraine could have a major impact on the implementation of central bank digital currency (CBDC) around the world.
For example, China uses the e-yuan to deal with the dominance of the US dollar.
According to Yamaoka, restrictions on the use of financial infrastructure should not be implemented excessively in order to maintain its effectiveness, adding that "the most powerful and effective counterattack is through the freezing of Russia's foreign reserves".
The great power wielded by western countries leaves a visible impact on the global financial infrastructure for the political and security aspects of the country.
This is where China took the opportunity to promote the e-yuan as an alternative currency for cross-border settlements, making the CBDC a key topic when debating national security and defense.
In fact, the International Monetary Fund (IMF) also believes that the e-yuan has the potential to facilitate cross-border payments, especially if the country manages to reach an understanding with foreign jurisdictions.
No wonder why the country is so confident in the potential of the e-yuan even though there will be a digital dollar.
So far the biggest effort China has undertaken is the use of the digital yuan in the recent Winter Olympics and the digital yuan has actually reached 260 million uses in the country.
Meanwhile in mid -February, Russia has successfully conducted testing of digital ruble transactions, proving a successful interaction between the bank and its users.
What about digital dollars?
The United States (US) has so far still chosen not to rush into launching a digital currency despite undeniably starting to panic with the development of the e-yuan.
Although the Federal Reserve once planned to unveil two digital dollar prototypes in July 2021, to date there has been no sign of policy implementation or testing.
But US president Joe Biden has approved an executive order related to digital assets and this brings hope to the production of digital dollars one day.
