China wants to reduce its exposure to the US-dominated financial system

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A report by Reuters has detailed the steps Beijing has taken to encourage the use of the digital yuan, its digital currency. China launched the digital yuan, which is also known as the e-CNY, in 2020. It offers the country a way of bypassing an international financial system dominated by Western banks and underpinned by the US dollar, but uptake has been slow. Reuters reports that Beijing has pressed banks to use the digital yuan in international transactions relating to its Belt and Road Initiative. China is betting that digital currencies, which only exist electronically, are the future of money and has outlawed cryptocurrencies. Its approach differs from that of the US, where the Trump administration has banned digital currencies and has promoted dollar-backed stablecoins as a way of cementing US financial dominance.