The Chinese government is always looking out for its citizens, and now it has found one more way to “help” people.
In 2014, the People’s Bank of China set up a research team to create a state-run digital currency. The goal was to lower the cost of issuing paper money as well as increase the central bank’s control over the money supply.
A senior official at the People’s Bank of China, Deputy Director Mu Changchun, said the country’s digital currency is almost ready for prime time.
Mu said the issuance of the digital currency will rely on a “two-tier” system in which both the central bank and financial institutions will be legitimate issuers.
He also said that the digital currency would not solely rely on blockchain technology as current blockchain technology would not be able to handle transaction volumes in China.
It’s likely the government will require citizens to use the digital currency and will hope to phase out paper money, which is expensive to print, issue, manage, and retire.
The new system will give the government complete access to the financial lives of every person in the country, right down to every toll paid and every meal eaten.
As if it weren’t already, privacy will be a thing of the past.
But there is a downside for the government. Digital currencies might be easier to manage, but cybercrime is on the rise. The Chinese could be setting themselves up for massive currency hacks, which would wreak havoc on their financial system.