6 ms·

China Creates Its Own Digital Currency, a First for Major Economy

35 points by prostoalex 6y ago

RichardHeart 6y ago
All the currencies have already been digital for decades. The most interesting part of this was the expiration timer to get people to actually spend. Otherwise, what really does this do that alipay or wepay doesn't?
- AnimalMuppet 6y ago
  It lets China claim to have a national digital currency, which nobody else has. It doesn't have to functionally add anything; it adds something in PR for China.
- xyyzy 6y ago
  I see it mainly of getting rid of physical money faster. Ofcourse people already use alipay, wechat pay and they spearheaded it. The expiration timer is most likely to incentive people to use this over wechat and alipay and get faster usage feedback. Note that wechat and alipay are commercial companies. So having a national digital currency does have benefits
- bingbong70 6y ago
  The difference is that the largest trading nation on the planet just created a system for 0 fee transactions that can expand to global usage quite easily (I believe wepay/alipay were mostly intended for domestic use). If a tiny country that produced nothing did this, it would be less relevant.
  - yorwba 6y ago
    WeChat Pay and Alipay could expand to global usage even more easily, because they're actually in widespread use. Some stores in other countries already accept them as a payment solution for Chinese tourists: https://www.presseportal.de/en/pm/105224/3983905 https://www.presseportal.de/en/pm/105224/3983905 The only reason they're not freely available for anyone to use is that it would make it easier for Chinese citizens to move their money out of the country, which the government doesn't want them to do. The "digital yuan" isn't going to be different in that aspect.
    - ngcc_hk 6y ago
      Well guess they can easily dig into the system and hence make sure those money out there are all theirs. As said, money inside China is not yours, ask a guy Ma. Now we may say, digital money of China is not yours as well, just the ccp.
      - bingbong70 6y ago
        Are dollars really yours inside the sanction happy dollar system?
gruez 6y ago
Matt levine covered this yesterday: https://www.bloomberg.com/opinion/articles/2021-04-06/greensill-capital-financed-imaginary-invoices-for-gupta-s-liberty https://www.bloomberg.com/opinion/articles/2021-04-06/greens... (scroll down to the "Digital yuan" section) His conclusion? >All of this stuff can be done conventionally, with the usual banking system. [...] I don’t really buy that central bank digital currencies will dramatically change the nature of money, and I’m not sure why China’s digital yuan would materially affect the global hegemony of the U.S. dollar. But surely central bank digital currencies can be convenient for central banks, and for governments.
jefftechentin 6y ago
> The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start. Yikes, that is a lot of power. Been an ideological Bitcoin holder/gold bug/physical cash fan for quite some time now. The sophisticated mechanisms that Central Banks have to control the economy/money seems dangerous in shortsighted democracies, and nightmarish in more authoritarian states. No anonymity in financial transactions makes it easier to catch drug dealers and tax evaders. The ability to control the money supply will keep the economy healthy (theoretically). Only problem is the ability of communities/individuals to economically resist national governments is so thoroughly squashed that citizens are turned into subjects when the nations elites decide subjugation is a good idea. Dirty secret of politics is that rights become inalienable in the same way boxers become champions. By winning a lot of fights.
- AnimalMuppet 6y ago
  If I believed in crypto, a digital currency controlled by a government seems exactly like the wrong answer.
  - loceng 6y ago
    What about if the citizens of each democratic nation voted to join other nations using the same blockchain?
    - AnimalMuppet 6y ago
      First, that's irrelevant to the discussion here, which is China's digital currency. The citizens of China are not going to be given the chance to vote for any such thing. Second, even if what you say comes to pass, so what? If I'm into crypto because of independence from governments, how does what you're suggesting make me any more interested in using that currency?
      - loceng 6y ago
        Because of the pitfalls of Bitcoin and because of the value that comes from trusted centralized services; just because there are existing problems with current governments doesn't mean the ideal or best solution is disregarding them and creating/supporting a wildwest situation.
deleted 6y ago
[deleted]
chriselles 6y ago
The concerns I have with a Digital Yuan are linked to China’s One Belt, One Road initiative with the adding of a digital layer to that effort. IF China is able to successfully export its Super-platforms into the developing world it will provide the means thru which it could supplant the US Dollar with the Digital Yuan as the primary means of exchange with low friction switching costs. At the moment, Zipf’s Law still applies with the US Dollar still the dominant currency used with the Euro a distant 2nd. China’s Yuan is still low single digit %. But this could change rapidly if China is able to successfully push their domestic super-platforms onto the developing world thru a strategy of One Belt, One Road debt trap diplomacy combined with offering their fellow authoritarians ‘moderator’ within the Chinese ‘administrator’ surveillance framework, and offering users purchasing power stability. While the decision isn’t binary, if the CCP had to choose between investing in a counter to the US military’s trillion dollar super-carrier battle group sunk cost or adding a billion developing world users for Chinese super-platforms I think the choice is simple. The latter is cheaper, and ultimately pays for the former. My thinking is the threat today is low, but the vulnerability looking out a decade+ is extremely high.

35 points by prostoalex 6y ago

All the currencies have already been digital for decades. The most interesting part of this was the expiration timer to get people to actually spend. Otherwise, what really does this do that alipay or wepay doesn't?

AnimalMuppet 6y ago
It lets China claim to have a national digital currency, which nobody else has. It doesn't have to functionally add anything; it adds something in PR for China.
xyyzy 6y ago
I see it mainly of getting rid of physical money faster. Ofcourse people already use alipay, wechat pay and they spearheaded it. The expiration timer is most likely to incentive people to use this over wechat and alipay and get faster usage feedback. Note that wechat and alipay are commercial companies. So having a national digital currency does have benefits
bingbong70 6y ago
The difference is that the largest trading nation on the planet just created a system for 0 fee transactions that can expand to global usage quite easily (I believe wepay/alipay were mostly intended for domestic use). If a tiny country that produced nothing did this, it would be less relevant.
- yorwba 6y ago
  WeChat Pay and Alipay could expand to global usage even more easily, because they're actually in widespread use. Some stores in other countries already accept them as a payment solution for Chinese tourists: https://www.presseportal.de/en/pm/105224/3983905 https://www.presseportal.de/en/pm/105224/3983905 The only reason they're not freely available for anyone to use is that it would make it easier for Chinese citizens to move their money out of the country, which the government doesn't want them to do. The "digital yuan" isn't going to be different in that aspect.
  - ngcc_hk 6y ago
    Well guess they can easily dig into the system and hence make sure those money out there are all theirs. As said, money inside China is not yours, ask a guy Ma. Now we may say, digital money of China is not yours as well, just the ccp.
    - bingbong70 6y ago
      Are dollars really yours inside the sanction happy dollar system?

gruez 6y ago

Matt levine covered this yesterday: https://www.bloomberg.com/opinion/articles/2021-04-06/greensill-capital-financed-imaginary-invoices-for-gupta-s-liberty https://www.bloomberg.com/opinion/articles/2021-04-06/greens... (scroll down to the "Digital yuan" section) His conclusion? >All of this stuff can be done conventionally, with the usual banking system. [...] I don’t really buy that central bank digital currencies will dramatically change the nature of money, and I’m not sure why China’s digital yuan would materially affect the global hegemony of the U.S. dollar. But surely central bank digital currencies can be convenient for central banks, and for governments.

jefftechentin 6y ago

> The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start. Yikes, that is a lot of power. Been an ideological Bitcoin holder/gold bug/physical cash fan for quite some time now. The sophisticated mechanisms that Central Banks have to control the economy/money seems dangerous in shortsighted democracies, and nightmarish in more authoritarian states. No anonymity in financial transactions makes it easier to catch drug dealers and tax evaders. The ability to control the money supply will keep the economy healthy (theoretically). Only problem is the ability of communities/individuals to economically resist national governments is so thoroughly squashed that citizens are turned into subjects when the nations elites decide subjugation is a good idea. Dirty secret of politics is that rights become inalienable in the same way boxers become champions. By winning a lot of fights.

AnimalMuppet 6y ago
If I believed in crypto, a digital currency controlled by a government seems exactly like the wrong answer.
- loceng 6y ago
  What about if the citizens of each democratic nation voted to join other nations using the same blockchain?
  - AnimalMuppet 6y ago
    First, that's irrelevant to the discussion here, which is China's digital currency. The citizens of China are not going to be given the chance to vote for any such thing. Second, even if what you say comes to pass, so what? If I'm into crypto because of independence from governments, how does what you're suggesting make me any more interested in using that currency?
    - loceng 6y ago
      Because of the pitfalls of Bitcoin and because of the value that comes from trusted centralized services; just because there are existing problems with current governments doesn't mean the ideal or best solution is disregarding them and creating/supporting a wildwest situation.

deleted 6y ago

[deleted]

chriselles 6y ago

The concerns I have with a Digital Yuan are linked to China’s One Belt, One Road initiative with the adding of a digital layer to that effort. IF China is able to successfully export its Super-platforms into the developing world it will provide the means thru which it could supplant the US Dollar with the Digital Yuan as the primary means of exchange with low friction switching costs. At the moment, Zipf’s Law still applies with the US Dollar still the dominant currency used with the Euro a distant 2nd. China’s Yuan is still low single digit %. But this could change rapidly if China is able to successfully push their domestic super-platforms onto the developing world thru a strategy of One Belt, One Road debt trap diplomacy combined with offering their fellow authoritarians ‘moderator’ within the Chinese ‘administrator’ surveillance framework, and offering users purchasing power stability. While the decision isn’t binary, if the CCP had to choose between investing in a counter to the US military’s trillion dollar super-carrier battle group sunk cost or adding a billion developing world users for Chinese super-platforms I think the choice is simple. The latter is cheaper, and ultimately pays for the former. My thinking is the threat today is low, but the vulnerability looking out a decade+ is extremely high.