Imagine a currency that can expire, or that the government can require citizens to use only for specific purchases. Imagine no further because that is the power the Chinese government holds through its newly tested digital currency.
China’s digital currency is backed by China’s central bank, but unlike traditional bank accounts, users cannot withdraw physical cash. The Chinese government has the power to direct the way users spend the money or how quickly they spend it because the currency is fully digitalized. The money is accessible through an app on users’ phones.
“I think it’s very likely that the Chinese will push into place a digital currency that will first partner with, and eventually probably supplant, paper money,” Dean Cheng, a senior research fellow in the Asian Studies Center at The Heritage Foundation, tells The Daily Signal.
There are serious national security and global economic concerns should China choose to embrace a fully digital currency, Cheng says.