China’s “Over-Obsessive Control” is the Main Motivation for Its DCEP Digital Currency Initiative
- The launch of DCEP “is more about politics than technology”
After five to six years of research, China’s central bank revealed few specifics of its Digital Currency Electronic Payment (DCEP) project while a Chinese official finally stated that the People's Bank of China (PBoC) is likely to be the world’s first central bank to launch a digital currency.
Digital Currency Electronic Payment will be powered by blockchain tech and sent to user digital wallets just like Facebook’s Libra, but would also have features allowing the central bank to use analytics to track just how the currency moves from wallet to wallet. Essentially giving them the power to supervise transactions.
Motivation: Control of Money and Money Supply
According to experts, this is not just financial innovation but also a way to have fail-safe control over its cash economy.
Recently, Huang Qifan, Vice President of China Center for International Economic Exchanges stated that the significance of DCEP is in the replacement of money.
Market observers say the main motivation behind the project is to protect its capital borders in the face of fears.
“There’s a consensus around the world among central bank governors and governments at large that they want to have control of money and money supply and the seigniorage that comes along with it,”
said Keyu Jin, professor of economics at the London School of Economics on the sidelines of a forum in Singapore.
“But over-obsessive control and governance is probably more unique to China than anything else.”
DCEP launch is “More about Politics than Technology”
However, there is no fixed timeline for when the digital currency will be launched.
In the country, there have been few public reactions on the central backed digital currency and a few public discussions on Chinese social media platforms like Weibo have mixed views.
While some say it could prevent corruption others are concerned about their safety and freedom to build wealth.
“Theoretically, with digital currency, you could do away with bank accounts,” a Union pay official told Reuters. “The launch is more about politics than technology.”