Ray Dalio: China’s Digital Yuan Will Overshadow the Digital Dollar

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According to billionaire investor Ray Dalio, China’s digital Yuan will outpace the United States’ efforts to create a central-bank digital currency. 

In an interview with CNBC, The Bridgewater Associates founder shared that when the United States issues its own CBDC, it will certainly have its uses and “be viable.” But according to him, it won’t be the most competitive one, with the U.S. economy slowing down from its rising debt levels.

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China’s digital Yuan, on the contrary, would be much more competitive in terms of value and use, he argued. 

“I think we’re going to enter a world in which people will be thinking which currency, and the ones that have the best fundamentals will be the ones that will be the most competitive and that’ll be threatening to countries.”

The reasoning for this was with the expectation of China’s economic growth continuing to outpace the U.S. economy, especially if the Yuan became more internationally accepted with a relatively healthier interest rate environment. 

“I think you’re going to see the renminbi become more significant… a strong currency, a stable currency, more attractive-returning currency, and also a more widely used currency in the years ahead.” 

The dollar (USD) continues to weaken against the Yuan (CNY) as both economies begin to recover from the pandemic. Source: Tradingview.com
As blockchain technology continues to carve out a bigger role in the world’s financial systems, governments have turned to central-bank digital currencies (CBDCs) for the future. 

Economic powers like 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 a working CBDC into their economies.  

While the U.S. dollar continues to act as the single largest reserve currency, Dalio expects the Yuan’s share to increase to approximately 10-15% in five or ten years. Per the International Monetary Fund, China’s national currency remains behind the Euro, Japan’s Yen, and the British pound. 

When asked about Bitcoin in the interview, Dalio said that he anticipated China’s digital yuan to one day compete with the world’s largest cryptocurrency. However, despite China’s recent efforts to ban the cryptocurrency, the digital yuan would not dominate the crypto markets, he theorized. “Nothing ever completely takes over anything.”

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