How to solve the "Credibility Gap" in sovereign digital currencies?

Answer

The **"Credibility Gap"** is the fundamental obstacle to the global adoption of any non-Western digital currency. China can solve this through a combination of physical assets and digital transparency:

• Radical Transparency: Regularly publishing audited counts of gold reserves, verifiable on the blockchain, ensures that the market doesn't have to "take the government's word for it."
• Hard-Asset Backing: Moving from a pure fiat model to one where the digital token acts as a certificate for physical gold. This creates an "Intrinsic Value" floor.
• Protecting Redemption Rights: Establishing clear, legally protected frameworks for the convertibility and redemption of digital tokens into physical assets (or other stable offshore currencies).

Munawar argues that if the **Digital** is always provably linked to the **Physical**, the credibility issues surrounding capital controls and sovereign reliability can be navigated successfully.