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Why China Rushes to Roll Out Digital Currency
Epoch Times ^ | 09/02/2020 | Frank Xie, Ph.D, John M. Olin Palmetto professor in business; Univ. of South Carolina

Posted on 09/02/2020 12:27:22 PM PDT by SeekAndFind

In April, the Chinese regime announced that it would launch a digital currency pilot program. In early August, China’s four major banks—Bank of China, China Construction Bank, Industrial and Commercial Bank of China, and Agricultural Bank of China—expanded digital currency testing in first-tier cities, such as Shenzhen.

By mid-August, the Chinese Communist Party (CCP) suddenly accelerated its pace and planned to quickly promote the program nationwide.

Zhou Xiaochuan, former governor of the People’s Bank of China (2002–2018), said in 2016 that China planned to replace paper currency with digital currency in 10 years. Only a few years have passed, and the CCP hastily launched the digital currency program, way ahead of its original schedule. Apparently, China’s political crisis, economic deterioration, and the CCP’s increasing survival crisis have collectively led to the hasty, earlier-than-scheduled implementation of the plan.

What is the digital currency launched by the CCP all about? It’s an electronic currency used to replace paper money. The digital currency issued by the Central Bank of China is different from the virtual currency in the virtual world; it isn’t anonymous and decentralized accounting. It’s strictly controlled by the Chinese communist government. It isn’t a real cryptocurrency, because its encryption is at the level of users and merchants at most, not the regime and its state-owned banks.

China’s digital yuan is named “digital currency (DC)” or “electronic payment (EP),” and the Central Bank of China is still the issuer of currency. User registrations require real names. At least for the time being, digital yuan and paper yuan are equivalent, and the two are freely exchangeable. The real-name digital currency doesn’t have the characteristics of international encrypted currency, nor does it have the characteristics of true anonymity and security.

(Excerpt) Read more at ...

TOPICS: Business/Economy; Society
KEYWORDS: ccp; china; digitalcurrency

1 posted on 09/02/2020 12:27:22 PM PDT by SeekAndFind
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To: SeekAndFind
China’s so-called digital currency is actually a long-established electronic currency, plus the central bank’s gradual removal of paper currency, as simple as that. Many Chinese people have become accustomed to using mobile payment. It has become extremely popular in today’s China, as most transactions and settlements are already in electronic form.

But there are still many people who are willing to use paper money because they can trade without revealing their identities or whereabouts.

For the CCP’s corrupt and high-ranking officials, paper currencies can be hidden in secret places, whereas using digital currency will expose all their illegal assets.

According to the Chinese-edition BBC, an official of the People’s Bank of China said, “The legal digital currency will replace the total cash in circulation (M0).” Chinese authorities are also asking for digital currency to “replace all currencies” and “realize the reform of the currency operating system.”

The Central Bank of China and state-owned banks are the biggest winners of the digitalization of currencies. They no longer need to print, escort, and store paper currencies. Bank tellers no longer need money counters, and don’t need to count the remaining cash at the end of the day. There is also no need for a bank vault, except for storing gold and jewelry. Chinese e-commerce companies are among the first to cooperate with the government to accept digital currency, and they will also benefit from the program.

The biggest loser is the ordinary Chinese people. As almost everyone in China is already using mobile payment nowadays, switching to digital currencies will not bring more convenience, but will deprive more privacy and rights instead.

The Central Bank of China claims that digital currencies are decentralized and untraceable. This is an outright lie. The Chinese authorities are able to track the transactions all the way, as it is highly centralized and tightly controlled by the government.

The central bank also claimed that “payment data will be anonymous.” In fact, that isn’t the case. The government and banks can easily check the data at any time.

When the CCP formally issues digital currency, will they take back equal values of paper money? If not, it’s the same as printing money without any cost! If paper money is to be collected by Chinese banks in exchange for digital currency, are there going to be any quota as restrictions? When North Korea issued a new currency a few years ago, there was a quota. Many people suffered huge losses from this restriction.

If the same situation occurs in China, corrupt CCP officials will cry, but what they lose is just their illegal and bribery gains; Chinese people will cry because all their hard-earned money will be wiped out by the CCP.

2 posted on 09/02/2020 12:29:30 PM PDT by SeekAndFind
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To: SeekAndFind

The CCP will control what you can buy, how much of it and whether you can buy anything at all. They will need to force people to use this currency.

3 posted on 09/02/2020 12:30:26 PM PDT by Gen.Blather (Wait! I said that out loud?)
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To: SeekAndFind

Why is the CCP is forcibly and rapidly launching digital currency? there are seven possible reasons.

  1. China’s economy is in dire straits, food crises are emerging, grain purchases from Chinese peasants are insufficient, and state-regulated purchases and sales have reemerged. At this point, the supply and marketing cooperatives, the planned economy, and the “planned currency” are simply a perfect combination.
  2. Digital currency can help to conceal and obliterate the evidence of the CCP’s crazy printing of money and causing artificial inflation, plundering ordinary people, and transferring their assets to corrupt officials.
  3. Digital currency can digest the huge amount of funds invested in the housing market, which can cool the real estate boom.
  4. Getting ready for decoupling from the U.S. dollar. When decoupling, the yuan will depreciate sharply. If cash is recovered and a large amount of cash is destroyed, it is equivalent to issuing new banknotes. The issuance of digital currency as the new currency will make the devaluation controllable.
  5. Use digital currency to monitor people, control dissidents, and maintain political power.
  6. The CCP has used big data, surveillance cameras, mobile payments, Party branches, neighborhood committees, etc. to build the world’s first-class and most closed “1984” national system. Together with digital currency, the CCP will complement the last element of the “police state.”
  7. Compete against the new international digital currencies that may be launched by G-7 countries, such as the United States and Japan.

4 posted on 09/02/2020 12:30:52 PM PDT by SeekAndFind
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To: Gen.Blather

Why Did CCP Launch Digital Currency?

One of the reasons may be that it worries about the “Libra” digital currency plan promoted by American technology giants, such as Facebook, and cross-border digital currencies in other Western countries, and even non-government Bitcoin. Therefore, the CCP has a sense of crisis and feels that it needs to take preemptive actions.

China’s state-owned banks recently forcibly acquired private enterprises, such as Jack Ma’s Alipay and Tencent’s WeChat Pay. Apparently, the regime is on its way to play a monopoly role in China’s digital payment through such integration and seizures.

The transaction scale of third-party mobile payment in China is as high as 50 trillion yuan ($7.23 trillion), with Alipay and Tenpay accounting for 55 percent and 39 percent, respectively. China’s state-owned banks have been absolutely unwilling to face the acceptance pressure of Alipay and Tenpay for a long time. With the digitization of the yuan, they will no longer have this worry. Bank runs have occurred in various regions in China from time to time in recent years. After the issuance of digital currency, the CCP’s burden from small banks running into bank runs will be eased off.

5 posted on 09/02/2020 12:34:19 PM PDT by SeekAndFind
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To: SeekAndFind

“Why China Rushes to Roll Out Digital Currency”

Because it is ultimate control.

6 posted on 09/02/2020 12:40:25 PM PDT by WKUHilltopper
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To: SeekAndFind

If China does this, it is probably a really good idea for us, too. . . . / sarc

7 posted on 09/02/2020 12:45:15 PM PDT by RatRipper ( Democrats and socialists are vile liars, thieves and murderers - enemies of good and America.)
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To: SeekAndFind

It is a truism in security, that if you leave a “back door”, eventually someone else will exploit it. Government control is a back door.

8 posted on 09/02/2020 12:57:02 PM PDT by glorgau
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To: glorgau

We have all your blockchain!

9 posted on 09/02/2020 12:58:53 PM PDT by Wally_Kalbacken
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To: SeekAndFind

Complete control. Get rid of paper money and the government knows all that you have, pays you what it wants, takes what it wants from your money. No more stashing a roll of bills in the sugar bowl. No more stuffing the mattress with Alexander Hamiltons. In china they will just do it. Here, the government will have to convince people that it’s “good for them,” “more convenient,” etc.

Once they grab hold of your money, they will control the purchasing power of money, determine who has “too much” (Remember obama “at some point, you have too much money.”

Total control. Coming here if dems win. How do you think they are going to implement their plan of taking 1% per year of accumulated wealth over as assessed value of 1 million?

10 posted on 09/02/2020 1:03:09 PM PDT by I want the USA back (There absolutely MUST be a debate:Trump vs gropey-joe)
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To: I want the USA back

No digital currency should NOT be run by any government.

There is a future for digital means of transferring value. But it should be universal, and convertible to local currencies. And it should not be run by the banks.

Banks and Governments F us up every chance they get.

11 posted on 09/02/2020 1:14:04 PM PDT by Vermont Lt
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To: SeekAndFind

I haven’t used paper currency for the last 3 months. I primarily pay everything using credit cards which are paid off in full each cycle. The main difference in China’s approach is a government controlled money exchange where they can choose to invalidate / confiscate your funds instantaneously with no oversight. If this happens price of gold and bitcoin will go up and people will stash money outside the country in safe havens. May even drive up dollar value.

12 posted on 09/02/2020 2:07:42 PM PDT by krny9
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To: SeekAndFind

This is in no way a cryptocurrency on a blockchain ledger.

13 posted on 09/02/2020 4:33:15 PM PDT by sergeantdave (Teach a man to fish and he'll steal your gear and sell it)
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