First, DCEP will prevent the international capital markets from exploiting digital currencies, as it has the backing of the Chinese government and is a legal currency. This will prevent investors from losing their assets overnight, as has happened with Bitcoin, due to the lack of legal protection.
Second, DCEP will eliminate financial hegemony, which refers to a dominant country's overwhelming economic, political, military, and financial power to impose its will or rules on the global monetary system and obtain hegemonic profits. The United States, for example, benefits greatly from its dollar hegemony. DCEP is likely to challenge the dominance of the US dollar in the global monetary system, accelerate the internationalization of the renminbi, and influence other countries' monetary policies.
Third, the use of DCEP and blockchain technology will disrupt the distribution of wealth and create a new generation of wealth. Digital assets and blockchain technology will be revolutionary in the distribution of wealth, and a new group of wealthy individuals will emerge. Libra, which is being developed by Facebook, could also disrupt global wealth distribution and lead to the creation of a new global monetary system.
Finally, the use of DCEP will impact WeChat, Alipay, and banks, as they will have to adapt to the new digital currency. The use of DCEP will render physical bank branches obsolete, and the app with more active users will hold greater market value. Therefore, businesses related to finance and wealth management could undergo tremendous changes.
In conclusion, the issuance of digital currency by the central bank will have a profound impact on the global economy. This will lead to a fairer distribution of wealth and a rise of the renminbi. It is also expected to challenge the hegemony of the US dollar and lead to the creation of a new monetary system. The use of DCEP will impact several businesses, including WeChat, Alipay, and banks, which will need to adapt to survive.
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