US-China, Russia rivalry could scupper global digital currency network -Fitch
LONDON : A lack of mutual trust between the West and China and Russia could prevent the development of an international central bank digital currency system, credit rating agency Fitch has warned.
Most central banks are now exploring digital currencies in a bid to keep pace with technology, but experts stress that must be able to be used across borders if they are to be successful.
The worry is though that deteriorating relations between Washington and Beijing and Moscow, as well as some differing agendas, could make them reluctant to co-operate on the key technological aspects.
"We believe that there is a high risk that strategic factors and a lack of mutual trust may inhibit the development of a widely-used international wholesale CBDC (central bank digital currency) settlement system." Fitch said in a report on Friday.
It added that Washington might look to freeze out countries from any dollar-based cross-border CBDC system if that government did not align with U.S. values and legal requirements.
That though is likely to clash with the priorities of China and Russia, for whom the development of settlement systems more independent of U.S. control is a key part of the attraction of CBDCs.
Without co-operation it could see a number of different systems that do not talk to each other properly.
Some experts have likened it to the early days of mobile phones before international standards were agreed that allowed calls between countries.
"Some governments may be reluctant to agree on governance systems with strategic rivals," Fitch said.
(Reporting by Marc Jones; Editing by Chizu Nomiyama)