Among the many benefits that China anticipated from hosting the 2022 Winter Olympics, one of the most important and subtle was the boost it would give its digital currency.
The Games would showcase China’s mastery of financial innovation, speed evolution toward a cashless society and, in its most ambitious design, undermine the U.S. dollar’s position as the global reserve currency. Those plans have been undercut by the COVID-19 pandemic, which restricted the number of visitors to the Games, but the ambition and vision are inescapable.
Governments have been studying digital currencies for over a decade, prodded by the digitalization of money and the growing number of private companies mediating financial transactions. Central reserve bank interest in central bank digital currencies (CBDCs) intensified and development accelerated after Facebook’s 2019 announcement that it would launch Libra, its own digital currency. (Facebook last month said that it was giving up that project, now called Diem, because of regulatory hurdles.)