The highest U.S. tariffs in almost a century have had a muted impact so far on global growth, but Asian policymakers aren¡¯t lulled by the calm. They¡¯re taking their cues from jumpy markets and plotting what appears to be a mutiny against ¡°King Dollar.¡± In the 1960s, the French could only rail against America¡¯s exorbitant privilege. In the 2020s, China ¡ª aided by other countries ¡ª may be in a position to challenge it.
Those searching for evidence of that uprising in payment flows are looking in the wrong place. For years to come, de-dollarization will remain hidden in additions and alterations to financial plumbing. The cumulative effects will take time to show.
With little fanfare, China¡¯s e-CNY, the official digital currency, has gone from being interest-free cash to a yield-bearing product of commercial banks. It¡¯s a profound change. Until now the problem with e-CNY adoption was that even the Chinese state workers who received their salaries as tokens in their e-wallets would immediately swipe them into their bank accounts. Now they don¡¯t need to. For them and their banks, e-CNY is no longer any different from a regular deposit account. Popular payment apps like Alipay and WeChat Pay work with both.
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