If you're arguing that China's digital currency can be "weaponized" against the dollar, all I ask is that you explain specifically what you mean. What are the mechanics and dynamics that will have what result, exactly? Otherwise, you're just evoking a vague tech boogeyman.

I see a lot of reasons why China's digital yuan would be very *unappealing* for anyone outside of China to hold. Starting with the notion that its whole appeal to Beijing is that every transaction can (supposedly) be tracked and monitored with a much higher degree of visibility.

There's also the fact that some in Beijing are already talking about potentially making it "expire" so you have to spend it, to promote stimulus (not ideal in a reserve currency), or tinkering with the exchange rate, to make it diverge from the regular yuan.

I've heard people heavy-breathing about the power this will give China, but all of these potential features come with serious trade-offs, when it comes to how such a currency would be viewed and used, especially outside of China.

The most important thing to understand here is that, at the end of the day, the balance of payments has to balance, digital currency or not. This places severe limits on the role any currency can play globally, unless that country accepts certain outcomes.

The primary qualifications, and barriers, to a currency serving as an "international currency", much less the dominant one, aren't technical in nature, though those exist. They are economic and institutional.

The fundamental reality is that if you want the world to use your currency, you have to export that currency. And you do that either by running a large trade deficit, permitting large (net) outflows of capital, or both. Is China willing and ready to do this?

In 1944, the US imagined that by enshrining the Dollar as the world's dominant currency, its exports could dominate global markets. Instead, the US found out that for the Dollar to play that role, it had to become first the world's creditor and later its consumer of last resort.