The People’s Bank of China is reportedly considering the creation of a state digital currency and has filed more than 100 cryptocurrency and blockchain-related patent applications in the last two years. However, a new report from Bloomberg this week suggests that a national cryptocurrency in China may do little to expand freedom and opportunity for the country’s citizens. Instead, it could help the government exert even greater control over its people and the country’s financial system.
The People’s Bank of China, the country’s central bank, plans to introduce a digital currency of its own. But unlike the decentralized blockchain-based offerings, this one could give Beijing more control over its financial system. It would enhance the PBOC’s ability to root out risks and crack down on money laundering. It could also give the government an unprecedented window into individuals’ private lives.
According to Bloomberg, the central bank’s patent applications indicate that the new digital currency would replace the nation’s cash, as people and businesses would need to download a wallet and then exchange their yuan for the new currency. They would then use that cryptocurrency for all financial transactions.
However, that new currency would not enjoy the privacy and relative anonymity offered by private cryptocurrencies. Instead, BPOC deputy governor Fan Yifei has indicate that the nation’s banks would be required to submit transaction reports daily and impose caps on account holders' transaction amounts.
As Bloomberg reports, some critics are concerned that the system could facilitate even greater PBOC control over the country’s people and economy:
Filings made public in October describe a currency that would require banks making loans to input details about borrowers and interest rates before funds could be transferred. Banks attempting to lend to companies blacklisted by the government would be automatically prevented from doing so. The patents don’t mention denying loans to individuals, but critics worry such technology could also be used to punish political dissidents.