“What will happen to my freedom to build wealth, my secrets and safety?” one user asked on Chinese social media platforms in the apprehension of the digital currency.
China’s digital currency plans have far-reaching implications. The idea that began with Bitcoin’s and crypto’s rise five years ago is now shaping out to be a gigantic political move. Over these five years, China has filed over 50 patents related to blockchain technology and cryptocurrency.
Their blockchain-based currency is close to completion, but reportedly, anti-money laundering concerns are yet to be overcome.
Capital Control over Decentralization
The digital currency will enable the Chinese Government to establish absolute control over the monetary transactions in the country.
Keyu Jin, professor of economics at the London School of Economics, told the media,
“There’s a consensus around the world among central bank governors and governments at large that they want to have control of money and money supply and the seigniorage that comes along with it,” he added, “But over-obsessive control and governance is probably more unique to China than anything else.”
Hence, while cash or money will work seamlessly like physical pieces of paper money, this time, the Government will be able to surveil everything.
According to Mu Changchun, head of the Chinese central bank’s digital currency research institute, China will adopt a two prone approach: anonymous payments and “classified supervision.” He noted in his last address,
“Once we analyze these transactions, use big data and data mining technology and conduct identity comparisons, we will be able to find the culprits.”
Moreover, the Chinese Government is also likely to prohibit the exchange of Digital Yuan to other cryptocurrencies or stablecoins.