Does the Digital Yuan Threaten Freedom?
Are you wondering if the digital Yuan threatens freedom? Here is a guide on whether the digital Yuan threatens freedom.
Lately, people across the globe are recognizing Bitcoin and other cryptocurrencies’ emerging utility. This virtual currency has faced significant challenges in the past thirteen years, including huge price drops and bans from China. However, this digital money is an excellent store of value, a unit of account, and a medium of exchange. Entrepreneurs and well-established businesses are now accepting Bitcoin payments. On the other hand, some governments, like China, are developing their own Central Bank Digital Currencies. China banned its citizens from trading this electronic currency.
With the massive population of China, economic power, technical expertise, and desire for social control, this country poses a legitimate threat to global freedom via its digital Yuan. China has significant plans to ban cash and use digital Yuan as the only medium of exchange. Moreover, China plans to export its model through international standard-setting bodies globally.
Read: Are CBDCs a threat to Bitcoin and other Cryptocurrencies?
Some observers treat China’s plan for a Central Bank Digital Currency as a strictly progressive, technical move that other nations should emulate. For instance, some experts have expressed concerns about the possibility of China’s digital Yuan threatening the dollar’s dominance as an international reserve currency. The Chinese government’s alleged purpose of supplying a digital Yuan is to reduce transaction costs and make the payment systems more efficient. The Chinese people themselves have good reasons for not sharing that optimistic belief. The People’s Bank of China introduced this digital Yuan to increase state control of payment systems and closely monitor transactions and personal behavior.
Digital Yuan Threat to Freedom
The Peoples Bank of China’s recent whitepaper stated that the digital Yuan was creating an open, inclusive, innovative, and interoperable currency system for the digital economy. Additionally, the White Paper noted that as long as there is demand for the physical renminbi, the Peoples Bank of China will not supply or replace the physical currency via administrative order. Moreover, the White Paper also stated that the digital Yuan would support managed anonymity, meaning China is currently willing to tolerate a degree of anonymity that helps protect privacy and user information.
These statements from the White Paper provide the needed assurance to those who fear moving to a cashless society. However, some economists warn citizens that Central Bank Issued Digital Currencies are only as strong and credible as the institution that issues the currency. Also, these economists claim that there are higher chances of Central bank money in digital form becoming an additional instrument of government control over citizens rather than just a convenient, stable, and safe medium of exchange.
Digital Yuan Operations and Risks
The People’s Bank of China has competent economists who are under constant pressure to follow the rule of the CCP. The digital Yuan system will be a two-tier retail system whereby the Central bank will distribute digital Yuan to state-owned commercial banks, meeting consumer demands for digital Yuan. Unlike Bitcoin, which has a peer-to-peer system, thanks to blockchain, the state of China will direct how people from the start will spend digital Yuan to finish. However, Bitcoin users can purchase the Digital Yuan via the Yuan Pay Group. With a computer key, the People’s Bank of China can disappear this digital Yuan from the accounts of those it views as state enemies. Therefore, digital Yuan users will be at the mercy of the state in case of digital Yuan disputes.
The Bottom Line
China is closely moving to a cashless society. Therefore, people should be less concerned about the impact of the digital Yuan on the U.S dollar sovereignty than on the future freedom of China. Moreover, paper currency is still prevalent in China.