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INTERNATIONAL – When Satoshi Nakamoto introduced Bitcoin into the world in 2008, he or she or they (the mystery survives) launched it as a way to end the power of central authorities in the financial sector.
Ten years later, the Chinese government is adapting the ideas behind Bitcoin to do exactly the opposite.
The People & # 39; s Bank of China, the country's central bank, plans to introduce its own digital currency. But unlike the blockchain-based decentralized offerings, this could give Beijing greater control over its financial system. It would improve the PBOC's ability to eradicate risks and suppress money laundering. It could also give the government an unprecedented window in people's private lives.
The currency will initially replace the money, PBO vice governor Fan Yifei said in an article at the start of this year. According to patents registered by the central bank, consumers and businesses will unload a mobile wallet and exchange their yuan with digital money, which they could use to make and receive payments. Basically, the PBOC could also monitor whenever money changes hands.
Fan suggested in his article that banks would need to present daily information on transactions and that there would be limits on private transactions. The PBOC declined to comment.
The project was initiated by the former governor of the Chinese central bank, Zhou Xiaochuan, who retired in March. He decided to develop the digital currency in part to protect China from having to adopt a technological standard, like Bitcoin, designed and controlled by others. China has banned cryptocurrency trade and the first token offers last year.
Since 2016, PBOC software developers have registered 78 digital currency patents, according to a Bloomberg News finding of Chinese intellectual property documents. As of August, the bank had 44 patents related to the blockchain, ranking fifth in the world, according to the Chinese commercial publication IPRdaily.
If the Chinese leaders sign the currency, its introduction will probably be gradual. Early adopters would be prevented from using it on investment products, says a person who is familiar with the central bank's plans, which would make the impact on monetary policy negligible.
However, PBOC patent applications suggest that the central bank could end up tracing daily transactions. Deposits made public in October describe a currency that would require banks to grant loans to provide detailed information on borrowers and interest rates before funds can be transferred. Banks that try to lend to blacklisted companies from the government would automatically be unable to do so. The patents do not mention the denial of loans to individuals, but critics fear that this technology can also be used to punish political dissidents.
The PBOC could still elaborate some of these details: the central bank published six job openings at its Digital Currency Institute in Beijing in October, looking for candidates with expertise in everything from software and cryptography to legal and economic research.
Bloomberg
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