Fred Reed posted an interesting – and disturbing, as is his style – article about the new digital yuan currency the Chinese government is debuting at the Winter Olympics (links from the original):
The dijjywan, being rolled out in the Winter Olympics, is not a cryptocurrency like Bitcoin, intended to maintain anonymity of users: all transactions are or can be known to Beijing. A dijjywan account is not a bank account, though it is administered by PBOC, the People’s Bank of China … It is as close to being physical currency as you can get without being physical currency. Transactions are instantaneous and final.
So how does it work? As an individual, you will download an app that China calls a digital wallet to your cellphone, as you would any app. This is currently being done in China. You do a face scan and the system gives you a unique QR code. You now have a dijjywan account.
I don’t want to act like I know much about this, and will just encourage you to read Fred’s article and do your own research. My main thought, though, is that this is the first I’ve heard of this currency, which is odd considering that it represents a possible contender with the dollar, or even with Bitcoin, for the world’s reserve currency. Libertarians (like I used to be) have long warned that the only thing propping up the US is the fact that everyone in the world uses dollars – if the rug gets pulled out from under us on that front, the whole house of cards will come tumbling down and we’ll be as broke as Zimbabwe in a year.
I’ve always been a fan of the idea of hard money underlying national finances. Gold, of course, is the “gold standard” on that front, but there has a been a lot of recent speculation that blockchain currencies like Bitcoin could serve a similar purpose, since they can’t be arbitrarily inflated or deflated by any form of government policy. Basically, hard constraints on government’s spending ability are the bedrock of liberty, going back at least to Parliament effectively taking the purse strings away from Edward I Longshanks after he blew all of England’s money on futile foreign wars (sound familiar?). The “digi-yuan” appears to be the exact opposite of that. Seems like a bad idea to let the communist Chinese require you to scan your face to buy groceries. But, as the Chinese philosopher supposedly said, “may you live in interesting times”….