China’s recent announcement to join the central bank digital currency (mCBDC) bridge project demonstrates its willingness to design a world without the U.S. dollar supporting it.

While China eclipses the United States in the space race for digital currencies, could that be a Betamax-versus-VHS scenario of incompatible financial systems? The world may depend on the U.S. dollar presently, but the world may switch to another currency under China’s influence. If the U.S. government doesn’t lead private-public partnerships encouraging financial innovation, then China will leapfrog it and control the world’s financial infrastructure.

Project Inthanon-LionRock — a wholesale CBDC initiative launched in September 2019 between the central banks of Thailand and Hong Kong — was completed in December 2019. That project saw the successful development of a THB-HKD cross-border payment corridor network prototype using distributed ledger technology, with 10 banks participating.

The new “Multiple CBDC (m-CBDC) Bridge” project announced this week significantly expands on the earlier Hong Kong-Thailand efforts, with not only the addition of two more central banks and currencies but also with “strong support” from the Bank for International Settlements Innovation Hub in Hong Kong.

Yesterday, Australia’s central bank announced that it, too, would launch a digital currency project, in a reversal of its own earlier stance when it declared only weeks ago that there was “no strong public policy case” for an Australian CBDC. Australia’s new CBDC efforts will also be in partnership with ConsenSys.

Last month, the central bank of the Bahamas was the first in the world to fully launch a CBDC, the sand dollar. The Bank of Korea is hot on the CBDC trail, also announcing that it would distribute its CBDC as part of a 22-month long pilot test. The Bank of Japan is also contemplating joining the CBDC race, stating that it “considers it important to prepare thoroughly,” for digital currencies despite currently having no plans to issue one.

In the U.S., the Federal Reserve also signaled a new openness to collaborating with the private sector collaboration to create a digital dollar.