> The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.
Yikes, that is a lot of power. Been an ideological Bitcoin holder/gold bug/physical cash fan for quite some time now. The sophisticated mechanisms that Central Banks have to control the economy/money seems dangerous in shortsighted democracies, and nightmarish in more authoritarian states.
No anonymity in financial transactions makes it easier to catch drug dealers and tax evaders. The ability to control the money supply will keep the economy healthy (theoretically). Only problem is the ability of communities/individuals to economically resist national governments is so thoroughly squashed that citizens are turned into subjects when the nations elites decide subjugation is a good idea.
Dirty secret of politics is that rights become inalienable in the same way boxers become champions. By winning a lot of fights.
Reminded me of how, from my understanding, citizens of China don't own their property when they buy a 900 sqft condo for $900k minimum - they're just getting a 70 year lease on it; built in scarcity with no real chance for citizens to increase their own or their familial wealth - unless you're in the CCP hierarchy of course.
The concerns I have with a Digital Yuan are linked to China’s One Belt, One Road initiative with the adding of a digital layer to that effort.
IF China is able to successfully export its Super-platforms into the developing world it will provide the means thru which it could supplant the US Dollar with the Digital Yuan as the primary means of exchange with low friction switching costs.
At the moment, Zipf’s Law still applies with the US Dollar still the dominant currency used with the Euro a distant 2nd.
China’s Yuan is still low single digit %.
But this could change rapidly if China is able to successfully push their domestic super-platforms onto the developing world thru a strategy of One Belt, One Road debt trap diplomacy combined with offering their fellow authoritarians ‘moderator’ within the Chinese ‘administrator’ surveillance framework, and offering users purchasing power stability.
While the decision isn’t binary, if the CCP had to choose between investing in a counter to the US military’s trillion dollar super-carrier battle group sunk cost or adding a billion developing world users for Chinese super-platforms I think the choice is simple.
The latter is cheaper, and ultimately pays for the former.
My thinking is the threat today is low, but the vulnerability looking out a decade+ is extremely high.
All the currencies have already been digital for decades. The most interesting part of this was the expiration timer to get people to actually spend. Otherwise, what really does this do that alipay or wepay doesn't?
It lets China claim to have a national digital currency, which nobody else has. It doesn't have to functionally add anything; it adds something in PR for China.
I see it mainly of getting rid of physical money faster. Ofcourse people already use alipay, wechat pay and they spearheaded it. The expiration timer is most likely to incentive people to use this over wechat and alipay and get faster usage feedback.
Note that wechat and alipay are commercial companies. So having a national digital currency does have benefits
The difference is that the largest trading nation on the planet just created a system for 0 fee transactions that can expand to global usage quite easily (I believe wepay/alipay were mostly intended for domestic use).
If a tiny country that produced nothing did this, it would be less relevant.
>All of this stuff can be done conventionally, with the usual banking system. [...] I don’t really buy that central bank digital currencies will dramatically change the nature of money, and I’m not sure why China’s digital yuan would materially affect the global hegemony of the U.S. dollar. But surely central bank digital currencies can be convenient for central banks, and for governments.
[+] [-] jefftechentin|5 years ago|reply
Yikes, that is a lot of power. Been an ideological Bitcoin holder/gold bug/physical cash fan for quite some time now. The sophisticated mechanisms that Central Banks have to control the economy/money seems dangerous in shortsighted democracies, and nightmarish in more authoritarian states.
No anonymity in financial transactions makes it easier to catch drug dealers and tax evaders. The ability to control the money supply will keep the economy healthy (theoretically). Only problem is the ability of communities/individuals to economically resist national governments is so thoroughly squashed that citizens are turned into subjects when the nations elites decide subjugation is a good idea.
Dirty secret of politics is that rights become inalienable in the same way boxers become champions. By winning a lot of fights.
[+] [-] AnimalMuppet|5 years ago|reply
[+] [-] bwestergard|5 years ago|reply
https://www.npr.org/sections/money/2019/08/27/754323652/the-...
[+] [-] loceng|5 years ago|reply
[+] [-] chriselles|5 years ago|reply
IF China is able to successfully export its Super-platforms into the developing world it will provide the means thru which it could supplant the US Dollar with the Digital Yuan as the primary means of exchange with low friction switching costs.
At the moment, Zipf’s Law still applies with the US Dollar still the dominant currency used with the Euro a distant 2nd.
China’s Yuan is still low single digit %.
But this could change rapidly if China is able to successfully push their domestic super-platforms onto the developing world thru a strategy of One Belt, One Road debt trap diplomacy combined with offering their fellow authoritarians ‘moderator’ within the Chinese ‘administrator’ surveillance framework, and offering users purchasing power stability.
While the decision isn’t binary, if the CCP had to choose between investing in a counter to the US military’s trillion dollar super-carrier battle group sunk cost or adding a billion developing world users for Chinese super-platforms I think the choice is simple.
The latter is cheaper, and ultimately pays for the former.
My thinking is the threat today is low, but the vulnerability looking out a decade+ is extremely high.
[+] [-] RichardHeart|5 years ago|reply
[+] [-] AnimalMuppet|5 years ago|reply
[+] [-] xyyzy|5 years ago|reply
Note that wechat and alipay are commercial companies. So having a national digital currency does have benefits
[+] [-] bingbong70|5 years ago|reply
If a tiny country that produced nothing did this, it would be less relevant.
[+] [-] gruez|5 years ago|reply
His conclusion?
>All of this stuff can be done conventionally, with the usual banking system. [...] I don’t really buy that central bank digital currencies will dramatically change the nature of money, and I’m not sure why China’s digital yuan would materially affect the global hegemony of the U.S. dollar. But surely central bank digital currencies can be convenient for central banks, and for governments.
[+] [-] unknown|5 years ago|reply
[deleted]