BEIJING, China–China is charging ahead with a bold effort to remake the way that government-backed money works by rolling out its own digital currency with different qualities than cash or digital deposits, according to a new report.
The country’s central bank, which began testing the “eCNY” digital currency in 2020 in four cities, has expanded those trials to bigger cities such as Beijing and Shanghai, according to government presentations reviewed by the New York Times.
“The effort is one of several by central banks around the world to try new forms of digital money that can move faster and give even the most disadvantaged people access to online financial tools,” according to the report.
“But while Bitcoin was designed to be decentralized so that no company or government could control it, digital currencies created by central banks give governments more of a financial grip,” the Times reported. “These currencies can enable direct handouts of money that expire if not used by a particular date and can make it easier for governments to track financial transactions to stamp out tax evasion and crackdown on dissidents.”
Global Movement
According to the Bank for International Settlements, over the last 12 months more than 60 countries have experimented with national digital currencies, up from just over 40 a year earlier. The countries include Sweden, which is conducting real-world trials of a digital krona, and the Bahamas, which has made a digital currency, the Sand Dollar, available to all citizens.
In contrast, noted the Times, the United States has moved slowly and done just basic research. Treasury Secretary Janet L. Yellen indicated that might change when she said an American digital currency was “absolutely worth looking at” because it “could result in faster, safer and cheaper payments,” the Times reported.
Yet no major power is as far along as China, according to the publication, which noted its early moves could signal where the rest of the world goes with digital currencies.
‘More Than Money’
“This is about more than just money,” Yaya Fanusie, a fellow at the Center on Economic and Financial Power, a think tank, and an author of a recent paper on the Chinese currency, told the Times. “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.”
While the Chinese government has not said if and when it will officially introduce the eCNY nationwide, several officials have mentioned having it ready for tourists visiting for the 2022 Olympics in Beijing, according to the report.