China to set up its own virtual currency The People's Bank of China (PBOC), China's central bank, hopes to launch its own virtual currency to cut the cost of handling paper money and to give the government more control of the country's money supply. A research team has been looking into digital currencies since 2014 and has achieved some encouraging initial results. …
I'm surprised they've taken this long..
Paper money/coin has, in many places, stopped being relevant. There's an awful lot, if not the majority, of transactions where any form of "money" only exists digitally as we whip out a card with a chip on it that tells a system...etc.. Cash still has some relevance, but it's not the defining thing it was, your bank balance, expressed in Booyahs, or DigFarts, or..., is nowadays.
Like the Bitcoin funnymoney or not, the system itself has proven that it's solid, and if you replace "mining" with supply by a central bank, and replace the Exchanges with something a little less sensitive to fraud and theft you have, in effect, still the same banking system, only with an upgraded way to deal with the bits and bytes that represent "money".
"Incompatibility of Blockchains" wouldn't be a problem either. No doubt all the moneychanging agencies would happily trade one kind for the other... for a fee. Just as they do with all the other funnymunny now. Makes no difference to them...
What the Chinese would love is that with a blockchain-based digicoin coupled to bank accounts, coupled to real people, you can very easily trace what money goes where. There's ways to dodge that as well, but overall it would allow for a much greater level of control and monitoring than you have with the current systems. Oh yes, they'll love that one...
Really AC? How do you KNOW that, when it hasn't been designed yet?
Or are you just assuming that it can only be worse, based on how terribly difficult you perceive clandestinely exchanging wads of dead tree to be?
I imagine SNUFFING OUT a huge chunk of corruption is a large part of the plan's APPEAL.
The U.S. government would love to make it harder for drug dealers to launder money. And they've (allegedly?) been the victim of counterfeiting of $100 bills by Iran and North Korea.
And they've been concerned with the cost of printing money; a while back, it was noted that their pennies cost 2.4 cents to mint.
So why didn't they think of this?
Aside from the traditional American dedication to individual liberty, I'm sure it helps that an influential and vocal section of the electorate would categorize such a system as the Mark of the Beast, without which no one could buy or sell.
Because the US government does not control the banks in the way China does, by a long shot. Roughly the same in Europe, really.
China can pull it off by designing/developing the system, and force any bank in China who wants to stay in business to switch to the new government-mandated system on such-and-such date. There's simply no way to do that in the US and Europe...yet. The banks themselves would have to form a conglomerate to define their banking on a blockchain based system internally and internationally first. Voluntarily. While the current system works quite well for them. Not within the next 10 years at least, unless there'll be "encouragement" from the central banks.
> Because the US government does not control the banks in the way China does, by a long shot. Roughly the same in Europe, really.
You assume that China is making its central bank do this. Which may be true, but wasn't stated in the article. However, the headline does seem to imply it.
I'm not sure whether it is the Federal Reserve or PBOC that you are likening to the various European central banks, but is theory they all play the same role. The central bank is supposedly independent, sets base rates and issues the money supply. So adopting a digital currency would seem to fit within the remit of the Peoples Bank of China, the US Federal Reserve, Bank of England, Danmarks Nationalbank, the European Central Bank, ... if they really wanted to do this.
Then yes, lending banks would probably feel forced to add it to all the other currencies they handle.
In my limited understanding, Bitcoin et al were founded on the basis that you could have secure financial transactions without needing the oversight of a bank (or banks). This in turn provided a level of untraceability for those who wished to remain anonymous. One weakness demonstrated was that Bitcoin style exchanges provided a significant (or slightly higher?) risk of fraud and mis-operation because there was no financial authority with oversight.
The world (as already noted) has digital currencies now. I doubt there are enough physical tokens to allow even a small amount of the electronic money to be turned into hard cash. The electronic system already has government oversight so at least some traceability (until it wanders into a tax haven).
So the real problem is the existence of tradeable but untraceable physical tokens which drives the black economy worldwide.
So what is all this digital currency shit? Look back at the establishment of the Euro. A multitude of different paper currencies suddenly became no longer valid. You had to dig the wad of cash out from under the mattress and take it to the bank to change it into the new shiny. At which point questions were asked if you suddenly had a bucket load of cash and no record of how you got it.
One case in point - just before the Euro went live, Mallorca was stuffed full of Germans buying up property for cash. Each property had to have a built in laundry (cough). So much so that the German tax authority had at least one office in Mallorca dedicated to checking up on German nationals buying property for cash and asking pointed questions.
So IMHO blockchain stuff is all smoke and mirrors. The aim is to render the old paper currency invalid so that it has to be exchanged for new stuff and taxes paid on concealed wealth, or written off. The same result could be obtained by calling in and reissuing the coinage. Or just ban all transactions in physical money and stick with the existing highly regulated electronic banking systems.
Pro tip - exchange your Yuan Renminbi into dollars pronto. Paper dollars are acceptable worldwide (especially in plain brown envelopes or for bulk deals a discreet briefcase).
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