China To Run Digital Currency Trials To Boost Economy
Beijing: In a quest to strengthen the country economically and become a global superpower, China decides to run digital currency trials of which the real purpose seems to be keeping a close eye on data and mass transactions, reports suggest.
As the visibility of the government increases, authorities are called upon to monitor and enforce compliance on transactions, with the power to wipe out amounts in digital currency without any permission from its users. In fact, entrusting the PBOC with a digital currency policy is another way of targeting private tech firms in the country. Around 90% of mobile payments in China run through two tech giants, stated Alibaba and Tencent, citing Portal Plus.
Zou Chuanwei, a digital currency specialist at a research institute in Shanghai, said that the government's digital currency expansion is established in a way that could influence the market of Wechat Pay and Alipay. For instance, authorities could mandate compulsory use of e-yuan for citizens and shopping while merchants are the wisdom to refuse the usage of Alipay and WeChat. Likewise, e-Yuan is directly loaded into the e-wallets of digital users by the state banks, automatically granting access to the digital data that is controlled by these firms. If Chinese citizens begin to use the digital yuan widely, a plethora of data would be accumulated in the hands of the government.
China, the world's second-largest economy, was already witnessing a slump in the latter half of last year and its growth again seems to be bleak. China's Zero-COVID policy and its highhandedness in handling the COVID crisis are causing hiccups in supply chains, delays at ports and a lockdown in Shanghai which in turn is posing a grave threat to the country's economy especially when it comes to Beijing's GDP targets.
With a property market slump and regulatory crackdowns last year the policymakers set the lowest annual GDP target for China in decades for 2022, claims local media.
The country that was the initial inventor of currency is on another path in making its currency digital. In the first week of April, the People's Bank of China (PBOC), China's central bank, declared its plans for the trial extension of a digital currency to several cities around the country, including the areas where Asian games are planned to be conducted this year. The basis for this expansion into digital currency started in 2014 when the PBOC developed its thoughts on currency digitalization under the Digital Currency / Electronic Payment project, which doesn't conceive the idea of virtual payments transfer. Rather, the project is about initiating the Chinese Electronic Yuan, also known as e-CNY, as a legal tender to replace paper currency in the economy.
There is a growing concern among Chinese citizens about the implementation of digital currency in their pockets, given that the PBOC policies are controlled by the Chinese Communist Party. One thing that differentiates Central banks in the West and other countries from China's is the line of control.
The PBOC has the authority to make decisions in respect of financial markets and policies, but the ultimate signs of green light are always to be provided by the most senior persons in the Communist party.
As the bank's responsibilities are restrained by the government, the PBOC governor could be removed at any time at the discretion of the party. Therefore, their voice is not very much considered in the case of monetary policymaking. This is one of the reasons why the digital currency plans are to be viewed with caution, if not suspicion, stated Portal Plus further.
China considers its central bank a significant tool for economic power. Whenever it seems that their power is challenged by other groups, they introduce plans to reinstate the control. The expansion of digital currency trials seems to be gaining data monopoly and mass surveillance on the transactions.
In a way, authorities can enforce a tool of control on their people and restrain the dominance of companies in China.
Earlier, in December 2021, the Chinese digital currency Renminbi came into existence ahead of the Winter Olympics and British Intelligence Agency red-flagged its use as a tool for global currency transactions and digital renminbi, raising security concerns and the threats this new technological development brings.
Jeremy Fleming, the Director of the Government Communications Headquarters (GCHQ) of the British Intelligence Agency, warned that although digital currencies provide a huge amount of money for the mass payment system Opportunities, this new technological development also brings threats.
"If implemented by mistake, it will give hostile countries the possibility of monitoring digital currency transactions. This gives them the ability to be able to exercise control over digital currency operations," he informed further.
No comments:
Post a Comment