The switch to digital currency gives governments more of a grip over their money. They can provide direct handouts that expire by a certain date and can be used to get rid of tax evasion and dissidents.
China is one of those countries and the government is testing a national digital currency in major cities such as Shenzhen, Shanghai, and Beijing, reported The New York Times. The currency is called eCNY and it was rolled out in four major cities last year.
The currency will also allow China to export its influence and standard-setting abroad. The country is in the most advanced stages worldwide when it comes to digital currency.
“This is about more than just money,” told The New York Times Yaya Fanusie, a fellow at the Center on Economic and Financial Power, a think tank, and an author of a paper on the new currency. “It’s about developing new tools to collect data and leverage that data so that the Chinese economy is more intelligent and based on real-time information.”
If this seems scary, it's because it is. Fanusie writes that China is "seeking a digital currency to harness the market share and technological innovation of private financial firms and to gain better access to information about the financial activities of Chinese consumers."
The Chinese government has made no official statement about if and when it will roll out the eCNY nationwide. However, several officials have said it will be ready for tourists visiting the 2022 Olympics in Beijing.
Plans for the new currency began back in 2014 when, inspired by Bitcoin, the People’s Bank of China set up an internal group to work on its very own digital currency. Will China win the global race to be a leader in digital currency? And what will that mean for its citizens' privacy? Only time will tell.