Money, text: CHINA MOVES FORWARD WITH THE INTRODUCTION OF ITS OWN CBDC, e-CNY

China moves forward with their implementation of the e-CNY, is that a good thing?

By Patch | Things of note and other interesting stuff | 14 Jul 2022

On the one hand, China bans all cryptocurrencies, while the other implements its own CBDC, the e-CNY. But what are they doing it? Let us see if we can better understand what is happening.

What is a CBDC and what can it be used for

CBDC stands for Central bank digital currency. And that basically means it is the digital version of that country's currency. Another way to think of it is it is the ultimate stablecoin. As it is backed by both a country's central bank and a 1-to-1 with the real currency.

One of the main arguments for a currency like this is that in case of a disaster the government can send monetary relief to people instantly. And it would also act as an electronic payment option. Allowing everyone to partake in electronic payment options. Whether they have a bank or not.

Another argument is it will make it harder for criminals to make transactions. And it will also bring more business that can be taxed. It would also allow users to do away with credit cards with transaction fees.

This all sounds like very good and solid argument for introducing a CBDC. But is it all as good as it is made out to be?

Why is China introducing a CBDC

It can sound rather counterproductive to ban the use of cryptocurrency, and then go and make what is basically as close as you can get without being a cryptocurrency. What is it that makes CBDC so different compared to cryptocurrencies? Most of the arguments above can also be applied to cryptocurrencies. So there must be something else we are missing.

And there is, and I would argue it is the very reason China is pushing their e-CNY. And that is the extra amount of control it allows the government or anyone in charge of handling such a currency. For starters it allows them to track all your purchases.

And if you add this on top of the social credit score already in place in China. As well as the loan app that keeps track of people in debt, that let other citizens report them if they see them spend money on things they think they should not be able to afford. Well, now you have an extra ingredient and degree of control. Now the government can see and track every purchase you make. You buy something they do not think you should have, down goes your social credit score, and voila you are not allowed to travel anymore. Or worse, you get imprisoned.

And as if that was not bad enough, there is even more. This will allow the government to basically freeze anyone's money at will. So if you are protesting then you can say goodbye to your money. Let's see how you like to protest now without any money to buy food with.

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Look how cute it is, please ignore our human rights violations and we will let you pet it

But surely I am just imagining the worst-case scenario, right... Right? If you have followed the news recently you might have seen the sorry about the Banks in Henan freezing their customer's accounts. Denying withdrawals. Sound a bit like the situation we currently have in crypto as well. The difference here is that when the people went to protest, suddenly their wellness app switched to red. Making it illegal for them to travel anywhere, due to covid restrictions. And this happened to a lot of people, even people not living in Henan. But people who used the bank. For that to happen more than one part of the local government has to be involved as the financial and the health are two separate entities.

And there have also been some reports that the government has hired counter-protestors, but I have not seen any official report of this. Only iffy sources. So take it with a grain of salt.

But at least to me, this is just painting more of the same bleak-looking picture of what and how far a totalitarian government is willing to go to control its population.

What are your thoughts on the CBDC issue, are you for or against it? Personally, I think if used correctly it can be a good thing. But sadly I do not think we are anywhere near to where I would be comfortable with having one of them. Please share your thought on this in the comment section down below.

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