According to billionaire investor Ray Dalio, China’s digital yuan will surpass the efforts of the United States to create a central bank digital currency.

In one Interview with CNBC, the Bridgewater Associates founder stresses that if the United States issues its own central bank currency, it will certainly have its benefits and be “viable.” But, according to Dalio, it will not be the most competitive currency, as the growth of the US economy slows due to rising debt.

China’s digital yuan, on the other hand, is much more competitive in terms of value and use, Dalio said.

“we will enter a world where people will think about which currency, and the one with the best fundamentals, will be the most competitive, and that will be threatening for countries.”

China’s digital yuan-a threat?

Dalio justifies this with the expectation that China’s economic growth will continue to surpass that of the United States. Especially if the yuan becomes more internationally accepted in a relatively healthy interest rate environment.

“I think you will see that the renminbi will grow in importance… a strong currency, a stable currency, a more attractive yield currency and also a widely used currency in the coming years.”

The dollar (USD) continues to weaken against the yuan (CNY) as both economies begin to recover from the pandemic. Source: tradingview.de

As blockchain technology plays an increasingly important role in the world’s financial systems, governments have turned to central bank digital currencies (CBDCs) for the future.

Economic powers such as China and the United States are two of many nations that have begun experimenting with their own digital currencies. Some small countries have already implemented functioning CBDCs in their economies.

While the US dollar continues to act as the largest reserve currency, expect Dalio that the share of the yuan will increase to about 10-15% in five to ten years. According to the International Monetary Fund, China’s national currency continues to lag behind the euro, the Japanese yen and the British pound.

Regarding Bitcoin, Dalio explains in the interview: He expects that China’s digital yuan will one day compete with the world’s largest cryptocurrency. However, despite China’s recent efforts to ban Bitcoin (here to the stock exchange), the digital yuan would not dominate crypto markets, Dalio believes:

“Nothing will ever take over anything completely.”

Text evidence: Bitcoin

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