In March 2022, tensions rose in Eastern Europe, marking a significant shift in global geopoliticsFollowing this, a crucial decision was made by Western countries, spearheaded by the United States: they excluded Russia from the SWIFT international payment network.

As geopolitical tensions escalated, we found ourselves engulfed in a fog of uncertaintyThe moment war transcends traditional physical form and enters the realm of digital warfare becomes a critical juncture for any nationFortunately, China had already begun to prepare for this eventuality – by investing in digital currency as early as 2014.

Hence, in this unprecedented era of change, how can digital currency break through the barriers set before it?

Understanding the profound implications of digital currency inevitably leads us to confront the SWIFT system, a pivotal framework in international finance.

The SWIFT system is a global banking communication platform, encompassing over 11,000 banks and financial institutions across more than 200 countries

Its reach makes it the largest and most authoritative payment processing system in the world.

On the surface, it appears to be an international organization; however, a closer examination reveals that it is essentially a financial tool controlled by the United States and its Western allies.

The U.Shas the power to remove any member state from this system, effectively severing that nation’s access to international payment systems and trade, leading to a disconnect from global commerce and communication.

Currently, Russia finds itself in such a predicament, underscoring its long-standing commitment to developing its own payment systems, including settling oil and gas transactions in rubles, as a response to potential financial isolation.

In today’s increasingly intense geopolitical contest, the emergence of digital currency offers a timely remedy to this pressing issue.

The financial blockade imposed by the SWIFT system is based on traditional physical currencies

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In contrast, digital currencies have evolved beyond physical representation, becoming primarily a digital-centric payment method, thus significantly enhancing the potential for transformation.

Moreover, the application of blockchain technology within digital currencies could create a fissure in the SWIFT system’s framework.

Up until now, SWIFT has operated on a one-to-one data exchange model, where each transaction progresses through various stages sequentiallyIn contrast, digital currencies enable all financial institutions to access information simultaneously, drastically reducing the costs associated with global transactions and information relay.

Aside from disrupting the SWIFT mechanism, digital currency employs a method termed “controlled anonymity.” Small transactions can be conducted anonymously to safeguard personal information, while larger transactions require identification, mitigating risks such as telecom fraud, cyber gambling, and money laundering.

Consequently, the rollout of digital currencies promises to benefit the general public significantly.

Thanks to an evolution in payment methods, users of digital currencies can evade transaction fees imposed by intermediaries

For instance, paying a bill through a third-party service might involve a small service charge, but using digital currency enables a user to pay the full amount, entirely avoiding middleman fees.

Perhaps the most impactful aspect of digital currency lies in its strategic significance on the international stage.

April 2022 marked a dark period for Chinese investors, as market indices plummeted from 3200 to below 2900 points, reaching the lowest levels since July 2020.

During this turmoil, the value of the yuan against the U.S

dollar sank from 6.3 to nearly 6.6, stirring lamentations in the foreign exchange market.

Several factors, including geopolitical instability and effects of the pandemic, contributed to these circumstances, but the dominant issue remained the flow of international capital.

Since March, the Federal Reserve has consistently hinted at interest rate hikes, applying a 25 basis points increase in March.

Following that, rumors of six more rate increases, each between 50 and 75 basis points, began to circulate, further triggering psychological tensions within the realm of international capital.

From a financial perspective, the increase in rates by the Federal Reserve induces a flight to safety globally

As the world’s foremost military and economic power, the United States often emerges as the primary choice for capital downturns.

As interest rates climb, deposits in banks become more appealing, discouraging people from investing in other opportunitiesTherefore, the rise in rates inevitably leads to capital outflows from markets and industries, directed predominantly towards the U.S.

This capital exodus is what has caused declines in our market indices and currency rates.

Interest rate increases represent one methodology by which the U.Sexploits global wealth, revealing the hegemony of the U.S

dollar.

However, digital currency has the capability to disrupt the expansion of the dollar.

The proliferation of physical currencies relies on circulation within daily life, inherently linked to reserve requirementsFor example, with a reserve requirement ratio of 10%, ideal conditions would allow 100 yuan to have a circulating effect of 1000 yuan; at a 20% reserve rate, 100 yuan can yield a 500 yuan impact.

The reciprocals of these percentages, 10 and 5, represent the so-called “money multiplier.”

Conversely, with a digital currency, the reserve requirement is effectively 100%, meaning that regardless of circulation methods, 100 yuan would remain 100 yuan.

To illustrate: if we have 1000 yuan, and the U.S

possesses 1100 yuan, under conditions of digital currency settlement, there will always be 100 yuan that cannot enter China, thus preventing unilateral influences on exchange rates and financial markets, making it difficult to drain capital post-interest rate hikes.

Essentially, digital currency represents a radical challenge to the dominance of the petrodollar, revealing its deeper strategic significance.

China's digital currency initiatives have placed it at the forefront of global advances, achieving a score of 75 in 2021, ranking third in the world.

China initiated trials for the digital yuan in 2019.

By October 2020, six additional cities were added to the pilot program, resulting in a “10+1” framework for testing digital renminbi.

In April of this year, the central bank announced a gradual expansion of the digital currency pilot, adding 11 more cities to its testing roster.

The adoption of digital renminbi has boomed

As of December 31, 2021, pilot scenarios had exceeded 808.51 million, with transaction amounts reaching 87.565 billion yuan.

Daily transactions with digital renminbi cover over 200 categories, including dining takeout, grocery shopping, and cyclingA significant proportion of digital currency transactions focus on small payments for everyday necessities.

Through platforms like Meituan, digital renminbi demonstrates its value in driving consumption and serving the publicSince January of this year, the digital red envelope subsidy program on Meituan has stimulated over 14 billion yuan in various consumer activities.

To date, over 5 million digital renminbi sub-wallets have been activated on Meituan, with more than 3.8 million users transacting with digital renminbi on the platform, representing a mainstream trend for digital currency usage.

Surveys show that 82% of respondents opened their first digital renminbi wallets via Meituan, illustrating its role as a key platform for the public's digital currency adoption.

There's an insightful statement: if there's an industry that can rival the internet, it's solar energy.

Yet, while advancing the digital renminbi strategy, only internet companies could undertake such crucial responsibilities.