The World’s largest economy by purchasing power parity (PPP) is China, well ahead of the United States. But the #1 on nominal GDP is the United States – and that is expected to move to China’s trophy table in years. But China is not just coming for the GDP crown, but a likely massive dislocation of the global economy: “The United States government has been rattled by China’s push to develop a digital alternative to its currency yuan. Bloomberg reported that the Biden administration is stepping up scrutiny of China’s plans for a digital yuan, with some officials concerned the move could kick off a long-term bid to topple the dollar as the world’s dominant reserve currency, according to people familiar with the matter.”
Honestly, imagine if Africa is pushing this, bringing its dozens of currencies under a unified supranational digital-based banking ordinance that would make commerce to work more efficiently. This is not even about monetary union with its associated welfare losses, when central banks lose autonomy to the supranational bank, making it harder for them to use macroeconomic tools to adjust for perturbations in their local economies. My point is that a digital clearing house is possible to make these African currencies “disappear” and “dissolve” into bits operationally.
I do think we need to begin that conversation at the African Union as very soon, China will be offering loans in e-yuan, and giving discounts to countries that adopt it. Most African banks would sign up as agents to enable trade in China, and just like that, the United States will understand that empires rise and fall on trade.
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Yes, if China disintermediates dollars across countries via e-yuan, everyone will understand that being called the manufacturing capital of the world is not just a statement. Possibly, e-yuan will save many countries about 8-15% lost which is lost during conversion first to US dollars, and then to Yuan as they import from China! This is China 3.0.
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You want leaders in AU to begin conversation on digital banking/currency alternative? Not sure you understand the major problem there.
What you are asking for requires high dose of intellectual rigour and diligence, and these are not things we are great at. If you bring experts to sit the political leaders down and explain this framework, it will still be overwhelming and confusing; it’s a brainpower issue, not just about desire and will.
It’s like expecting an average Nigerian politician to make sense of blockchain, it sounds too elitist and sophisticated, so even when the person is listening to you, he’s still not understanding anything. Some things are just too big to comprehend…
It’s a critical thinking deficit issue, so we need to first develop massive capacity in understanding complex and sophisticated policy frameworks, to the point that we can relay them to the common man like tales by moonlight or local proverbs. We are nowhere close to such level of excellence, our acquired education is still too shallow in so many ways.
When you hear those arguments on ‘skill or practical’ over university degree or theory, during policy formulations and development, you will understand that there are limits to certain jokes.