China's New Digital Currency Creating Unease About Privacy

(USA and Canada) Over the past few years, the way we do transactions has gradually become more digital. Platforms such as Apple Pay, Google Pay, WeChat, and other digital wallets as well as innumerable cryptocurrencies are in wide use throughout the world. However, a new development is underway; one which, for some, raises concerns over privacy: an entirely digital currency in China.

China has begun the rollout of its new digital currency called the "Digital Yuan", a virtual currency that China intends to use as a replacement for its paper currency. The new currency works through the digital Yuan app with which citizens can pay vendors who have opted to use the new currency. Over 10,000 vendors in China have opted in as the digital Yuan has virtually no transactional fees for vendors, creating a powerful economic incentive for early adoption. The problem is, however, that the new currency is entirely traceable by China's Central Bank, and, in the words of an expert on the matter, Yaya Fanusie, Adjunct Senior Fellow at the Center for a New American Security (CNAS), "This digital Yuan is less about money and more about data." It seems clear that China's reasoning behind their intended nationwide rollout of the digital currency is to begin surgically tracking the spending habits of its citizens. While the Chinese government claims that the tracking capabilities of this new currency are meant only to stop money laundering and funding for terrorism, the unprecedented wealth of data the government will have over each individual citizen always at its fingertips tells a different story. China intends to replace all cash in the country with the digital Yuan possibly as soon as Spring 2022. With all of China's currency in this form, companies and countries that trade with China may also have to adopt the digital Yuan in some form. Some view this as a very dangerous possibility, not just because of privacy concerns, but also because the digital Yuan can often have government-controlled expiration dates, putting even greater financial power into the hands of the Chinese government and taking it away from business owners.