Is China the New Spain?

Is China the new Spain? Let me explain.

Until the 1850s, the major currency of the United States was not the US gold or silver dollar, but the Spanish Real also known as the Piece of 8. (This is why Americans still refer to a Quarter as 2 bits, 2 eighths of a Real.) The Real was an international currency that dominated the southern Atlantic and Caribbean trade, which was vital to the early US economy.

The Real also filled the currency vacuum left by the US Government. Since 1789, the US did little to provide a US dollar other than allowing the Mint to create dollar coins from silver brought to it by citizens. So, US citizens and businesses were also pushed to use the Real as there was no alternative. No doubt, this situation boosted Spanish trade and its economy.

Now we have China creating a CBDC that could fill a vacuum left by the failure of the Fed to create its own. Will businesses seeking access to the Chinese market move to its CBDC and its efficiencies? Will the Chinese CBDC become the basis of international trade at least in Asian markets? What will this do to the US economy?

If China is the new Spain, then the PBOC's digital currency is the new Real.